GM: like flies to manure
Wednesday, July 26, 2006
I am unimpressed with anything I read about the state of affairs at General Motors. I sold it a year ago at $35, and about six months later the stock hit a low close of $18.33.
I call GM a pure speculation - the antithesis of quality companies (like the Cara 100) where most people should be focused on trading shares.
Today in Japan there is published speculation as to whether Auto giant Toyota Motor (a Cara 100 component) will let third-stringer Nissan Motor go into a tripartite alliance with Renault and GM.
Some of you may see this as a defensive move by Toyota. I see it more as a case of flies being attracted to manure.
Am I interested in the GM bonds, and so forth? Hardly. I have zero interest in trading any securities that are swarming with lawyers seeking corporate re-organization fees.
That is a trading activity best suited to professional arbitrageurs. And those are the people who typically trade on arguably illegal insider information and planted news stories, which, in my view, is the bottom of the barrel of capital markets trading.
I look for securities that trade freely in markets on the basis of corporate fundamental and quantitative data, and macro-economic drivers, which is the way it should be.
There are many reasons why Toyota Motor has excelled for years as a manufacturer of autos and trucks. General Motors management ought to have been watching TM as a case study in corporate success.