CNBC Headline: "Wall Street to Soar as GM Returns"

Welcome to the biggest pump-job of the 21st Century 

You know, it almost makes me sick to my stomach when I see headlines like this.  All week, the mainstream media has been talking up GM and their return to the stock market....like it's a good omen or something?  Hello???  GM was a poorly managed company that for decades produced sub-standard products by leveraging the half-hearted efforts of an insanely overpaid, union-coddled work-force.  Is it any wonder that they failed?   The fact that they were bailed out with our tax dollars is still a sore point with me, but to celebrate their return to the stock market like the homecoming of  a victorious General (no pun intended) borders on ludicrous.

Mark it down - SingleMalt is going on record saying that an investment in GM is a sucker's bet. 


So the hype over the past few days has been "this huge demand" for GM stock in the pre-IPO hoopla, which has lead to an IPO price of $33/share (up significantly from the initially anticipated $25/$26 share price), and a increase in the initial amount of shares to be offered.  The thing is, nothing material has really changed at GM except for the fact that they are now fully backed by the US Government.  Okay, so change their name to Government Motors...just because they're too-big-to-fail doesn't make them an efficient, well run organization capable of growing revenues and profits.   In fact, I can't think of a single State sponsored agency or entity that is - can you?  I mean, have we really seen anything truly innovative come out of GM since the bailout?  Nope!  Did our Government negotiators use the leverage they had at the time to break the union strangle-hold on GM and the other US auto manufacturers??  Not really.  You want to see something sad?  Take a look at the video clip below, and see what sort of work ethic the UAW union has fostered.  The footage is of Chrysler plant workers, but these same sort of stories have been rampant throughout the auto industry for decades and is representative of what one would expect to find at GM as well.




Bottom line:  We may see a flurry of initial activity, supported to a large degree by the primary dealers (Goldman, JP Morgan, etc.) who are now flush with billions of QE2 dollars, and will use this new found wealth to keep GM stock elevated in the short term, but if you're looking for a long term investment for your IRA, buying this stock at $33 or higher is a sure loser.

As for the shameful pump-job by CNBC and others in the mainstream media....if a pump is what you're looking for, you may be better off investing in one of these.....

And hey, it's just like CNBC - making a lot of false claims to get you to buy! buy! buy! But in this case you'll only be out $50 bucks instead of a big chunk of your portfolio.  You may even have a bit of fun while your at it, but you're on your own there....SingleMalt wouldn't know about such things.  LOL  :-)

Good luck trading!!!