Thursday, August 19, 2010

Anyone who buys shares in the 'new' General Motors is dumb, dumb, dumb.

Contrary to the claims of GM management and their government overseers, GM hasn't fixed itself. While it has shed itself of a lot of debt and has lowered its cost structure, GM still has the same problems that drove it (yes, pun) into bankruptcy.

They still have a hostile union, one that cares more about extracting pay and benefits for current workers than about the long term financial health of the company. They still don't make enough cars that people are willing to buy at a high enough price. They still have too many models, denying them the ability to recycle designs fast enough to keep buyers interested (cars sell best in the initial years after a re-design; the longer between design cycles, the bigger the falloff of what at one time may have been a nice selling car).

And there is a big possibility that even after the IPO, the government will still be calling the shots... which means decisions will be made for political reasons and not for business reasons. The last thing anybody ought to do is invest in a company whose management is occupied by any issue other than making money.