It was only yesterday that I posted Serious Money: GM, GE, Gee Wiz!, concerned that Barron's was betting on the wrong horse (which happens all too often -- see Sunday Funnies: Big Brown a sure thing at Belmont) as it pumped up General Motors (NYSE: GM) in a cover story two weeks ago.GM stock closed yesterday at $12.81 but today traded down to a new 52-week low of $11.21; as of 1:15, it is at $11.51, down nearly 10%.
GM is trading at a 30 year low. "Today's drop came after a Goldman Sachs analyst cut his rating for GM to "Sell" from "Neutral" and his price target to $11 from $16, saying things could still get worse for the North American automotive industry as a whole."
I wonder if he read my post yesterday . . . probably not. I am not a big fan of analysts as a group but this did not take a crystal ball. Barron's should do a follow-up story explaining how their crystal ball got so fogged up.
Not to pick on GM, Barron's or analysts, but this happens to all investors and prognosticators. My real concern about the articles I read is that everyone has way too many ifs, ands or buts in their analyses to draw definite conclusions. This is a recurring theme in my rants as I try to get folks to realize that it is very hard to determine the answer to an equation when there are a few known elements and a multitude of variables.
I think someone less long winded than I simply said, "yeah, when elephants can fly!"
UPDATE: The closing stock price was $11.43.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.
Why do we have a weak dollar?
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
Reader Comments (Page 1 of 1)
6-26-2008 @ 3:48PM
Ry said...
I was worried about the recent market sell-off today (approx. 300 points) until some facts occured to me and I'd appreciate someone letting me know their opinion about this: (1) the market continues to sell off for a simple reason it seems - people are selling stock. That is - there is a consumer driven need to re-coup losses from real estate revaluations and high gas prices. Our dependence on foreign supplies of oil is inflated by the understated lack of energy convservation and development at home vs. abroad. But, the reality is that the automotive industry's energy conservation revolution is also generating a wave of "re-tooling" that sometimes sacrifices jobs here at home. Is it fair to suggest, therefore, that monthly sell-offs in the market will be symptoms of consumers needs more than any real lags in our economy?