Is There Opportunity Hidden in GM's Bankruptcy?
GM is in the middle of an ugly, but maybe one day profitable, presto-change-o and though this means lost jobs, lost dealerships, lost money for millions, I keep getting questions from you on where’s-the-opportunity-at?
Is it the stock which has been under a dollar? I mean, it can only go up from here, right? Wrong. Even though it’s a behemoth of a company, BK or no BK (that’s ‘bankruptcy’, not where you get your burgers), it’s a gamble. Look at Lehman, or the dozens of other companies run underground in this recession. I’ve counseled too many of you who had too much money in one stock (one Lehman employee I remember was on my show because he had his whole, young retirement portfolio in Lehman stock, about $65,000. After all, he believed in the company).
That 84 cents can turn into zero cents pretty quickly so don’t make your solo-stock holdings any more than a small percentage (3 to 5 percent max) of your portfolio. With restructuring and some help from 60 percent government ownership, GM may end up a success story. However, if we already own 60 percent as tax-paying Americans, why sink more money in? Diversify!
And on the car/truck front, with Pontiac, Saab, Saturn and Hummer going bye-bye, is it a time to buy-buy? Yes, you’ll get below-market prices on maybe every one of these brands however, even if we’re talking the deal of the century on the outset, how much will buying a defunct brand cost you down the line? In this case, it’s not the defunct-ness that matters so much as the brand itself. In Edmunds.com’s Lowest True Cost to Own list, only Saab landed twice, or in GM’s case, even at all. So before you head to a GM lot or a dealership shutdown looking for some mega-savings, make sure that your make and model won’t cost you more as the years go by. You want to look not only at Edmunds.com’s True Cost to Own but the resale value of the vehicle. After all, if you end up paying more for a higher-rated brand at the outset but get more when you go to sell it, any discount you can get today at a GM lot is a mirage. And get the real deal on warranties and service. If you’re buying from a dealer going down, make sure you know where your warranty sits at and where you’ll be going for service.
Are you tempted to buy a new car now that you can get many (not just GM) at cost? If so, what are you doing with your old car? Send me your scoop below. Can’t wait to hear from you!