It's Oct. 4, 2011, and gasoline should be $2.49 a gallon today. Why isn't it? FWF columnist Pat Richards explains: More>
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Investor Warning: Don't buy that GM stock for $1.15 a share!
By Pat Richards
Why not? Because it is NOT General Motors stock any longer. The company which once traded on the New York Stock Exchange for over 80 years under the stock symbol "GM" is dead and buried by the bankruptcy court from which it emerged today, Friday, July 10, 2009. The old, used-to be General Motors stock which is trading on the Over The Counter (OTC) market no longer has anything to do with the new company and never will. And that's an official declaration of the court.
What still continues to trade today is a ghost which goes by the stock symbol GMGMQ on the penny stock list at the OTC called "the pink sheet". But as of today, that GMGMQ stock officially has no connection of any kind with the "new" General Motors Company.
Bottom Line: The "new" General Motors -- the one selling automobiles from a showroom in your town -- is not a publicly traded company at this point. You simply cannot buy stock in it right now. And you won't be able to buy stock in it until the new company has an initial public offering (which won't happen for at least another year according to a statement issued today by the company's Chief Financial Officer, Ray Young).
I have to repeat this once more: The stock now trading under the symbol GMGMQ has nothing at all to do with General Motors any longer. If you want a third party confirmation of this fact, just click on this link to quote.com which clearly shows the last trade of the old "GM" stock on June 1, 2009 (the day the company entered bankruptcy):
http://www.quote.com/us/stocks/quote.action?s=GM
If you prefer video confirmation, click on this link and then play the video:
http://www.cnbc.com/id/31045805
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So why is the GMGMQ stock still allowed to trade at all?
It's because of a stupid and dangerous technicality in Exchange and SEC rules. To completely wipe an existing stock off the map, the original company must issue a formal "cancel" order to the exchange. The old GM did not do that -- most likely for public relations reasons. They did not want the stigma to be attached to the "new" General Motors as being the company which canceled the existence of over 610 million shares of common stock with the stroke of a pen. But that is what happened.
Since no formal cancellation order has been received by the exchange, by law the exchange must continue to list the stock (under the symbol GMGMQ) and people can still buy or sell it. The stock market, particularly the OTC, is strictly a Buyer Beware operation.
But the truth is that a potentially massive public fraud is being committed with SEC sanction because of this technicality. They are allowing GMGMQ to be continue to be traded with the name "General Motors Corporation" attached to it -- and this has lead to confusion on the part of individual investors who don't understand the technicality. These individuals are purchasing GMGMQ stock right now, today, thinking they are buying stock in the "new" GM. They are not. And readers of the Financial Wellness Forum need to understand this: If you buy GMGMQ you are buying stock in nothing whatsoever.
As of Friday, the "new" General Motors is a totally PRIVATELY-OWNED company:
1) The U.S. Government owns 60.8% of the new company thanks to the $50 billion of aid it has committed.
2) The United Auto Workers health-care fund holds a 17.5% stake.
3) The Canadian Government owns 11.7% (because the company operates several large manufacturing plants in Canada).
4) The bond holders of the "old" General Motors have a 10% stake plus warrants to acquire more of the new stock (when issued).
5) There is currently no stock in this company available for purchase by individuals.
It will be at least a year before all this is sorted out in the marketplace and the "new" General Motors can be properly evaluated as a viable operating company (or not). That is why you won't be able to buy stock in it for a least a year. For now, invest your money in something else.
Just ignore that man in the trench coat standing on a dark corner of Wall Street offering to "sell you GM stock for a buck."
-- Pat Richards, July 10, 2009
Trump Baja? Baja Humbug!
By Pat Richards
Posted on March 7, 2009
The Los Angeles Times published an AP report that says investors in Donald Trump's Baja hotel-condo project will lose $32 million.
Trump's Baja fiasco is incorporated under Mexican law, and the people who put up their deposits have no legal recourse to recover their money.
Besides, even if it were under American law, Trump is bankrupt again, so they couldn't get their money out of him anyway. His casinos are in bankruptcy court right now, and his Chicago Tower is apparently about to go the same route.
Note the same thing happened to Trump back in the 1992 recession -- he's always been one of these all glitter-and-hype developers who only does well when the boom is on and people are being foolish with their money.
However, I simply can't muster up much sympathy for silly people who plopped down $200,000 to $3 million each so they could become "millionaires living in Baja." These investors had a stupid fantasy and they put their money into a stupid fantasy and got what they deserved.
People have been getting burned by falling for the "buy in at the pre-construction price" development scam forever, and not just by Trump.
People never learn: You only buy it when you can see it and touch it.
For the whole story, visit LAtimes.com's "Trump Baja venture leaves buyers high and dry," or Click Here>
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http://www.latimes.com/business/la-fi-trump7-2009mar07,0,5760149.story
