GM – General Motors Corporation Stocks: Bust or Bargain?
Posted on 26. Feb, 2009 by Simon Banks in Feature, Stocks
“I own half of the Las Vegas Strip” is what one man said when asked about his gambling escapades in Las Vegas. He believed because he lost money in over half of the casinos, that gives him a share in ownership. Not!
GM Stocks or Bust! Can the gamble payoff?
GM – Bust or Bargain: Should you invest in their stock?
In Favor of the House
Gambling is nothing more than betting money on an unsure thing. In Las Vegas, the best chance you have in winning or getting a return on your investment is 52% – and that is in favor of the house. The odds are ALWAYS stacked in favor of the house.
What about stocks?
Are the odds stacked in favor of the house? Is it true that the only person who can make money in the stock market is the person who already has lots of money? Why? Because they have more money to lose and it won’t effect them?
While everyone has been belly aching about what to do with the auto industry, GM’s stock fell below $1.53. In Las Vegas, that is like a progressive slot machine reaching $10 million dollars. Once a slot machine hits those kinds of numbers the amount of people playing them actually escalates exponentially – the phenomena is called ‘the greed factor’. But it was only savy stock investors who noticed what had happened to GM because they didn’t advertise the information in the news very loudly. GM stocks were ringing that ‘look at me’ bell like a red flag to a bull. Now, five days later, GM stocks have returned almost 70% on your investment.
Not bad for a couple days work. Put that information into “Las Vegas vacation” terminology. You save up for a year, maybe two to go on your dream vacation in Las Vegas. After hotel and airfare you have $2000.00 (to lose) to spend on food, drinks, gambling & other. Out of the $2000 dollars you spend $1530.00 on gambling. After four days of gambling you end up with $2550. That’s over one thousand dollars profit.
At least that is how it would have happened in your dreams. In the real world – you lose all your money and you borrow another thousand on your credit card because you know that just one more hand will be the winner. Now you have spent all that you can afford to lose, plus a little more.
Approach the Stock Market with the same losing mentality
If you were to approach the stock market with the same “I have brought so much money to lose, and when it’s gone fine” mentality as most people who go to Las Vegas and gamble their hard-earned savings – you just may be better off. If it is expendable money that you are willing to throw away – then throw it into a direction of ownership rather than a toilet bowl. Even if you lose – you haven’t lost anything because it was expendable money, remember?
What would you have if you had bought 100 shares of GM stock at $1.53 per/share. Five days later you would have $1,020.00 profit and 100 shares of stock in your investment portfolio. What if your stock purchase would have lost money? Then you would have technically lost money; however, you would still have 100 shares of GM stock waiting for the opportunity to rise again.
Now! Which is a better gamble with less risk? Las Vegas or GM Stock?
My money is on GM (NYSE: GM) and Ford (NYSE: F). Let me leave you with one thought – if you are going to gamble, maybe it is time you gamble on the future of America and American industry.
