Obama XXIV: Forward ... pause ... rewind ... play

[geezer]

Re: Obama XXIV: Forward ... pause ... rewind ... play

I don't mind a freewheeling discussion that shows two different opinions. I give the mag credit for that.

Geezer, did somebody driving a GM car run over your dog? "I know somebody who said...." = baseless tripe. If nobody is buying GM cars, why are they the best selling worldwide? A point you refuse to address becuase it doesn't fit your narrative. Have your imaginary friend show up with some proof of these accusations please. Otherwise I will post about my friend in the know who claims that geezer has 6 wives but only two of them are human and the others are farm animals. I have no proof of this, but hey, that doesn't seem to matter anymore.

Great post Rover, except where you missed or ignored every single relevant point. WHOOOOOSH!

It doesn't matter to me if you open your ears or not, it just makes you look even more stupid if you pretend facts don't exist simply because you choose to ignore them.

 

[Rover]

Re: Obama XXIV: Forward ... pause ... rewind ... play

This. P/E of 7.5 is very low - investors have very little long-term confidence that GM will be profitable, otherwise more would be buying in and driving the P/E back up to 15 or 20 where a healthy company belongs.

15 to 20 is a little high a standard for a non tech company but compare them to non-bailout auto company Ford, which is trading 2 times earnings. I'm not sure anybody in the auto industry is trading gangbusters right now. After all, auto purchases are something you can delay or live without unlike food or medicine.

geezer, I'm posting facts and you're posting opinion. GM's earnings are a fact of public record. If they are cooking the books thanks to laws such as Sarbanes-Oxley their executives will be charged personally with criminal behavior and jailed. If they are getting taxpayer refunds you've yet to show any proof of this beyond some conversation you say you've had with an unnamed insider. Furthermore your notion that govt spending is propping them up leaves no explanation for their success in the Chinese, Latin American or North American (ex US) markets. Everybody's getting slammed in Europe so we'll leave that alone. Yet I'm not understanding the situation? Okaaay...and make sure you remember Dolly the Sheep's anniversary present this weekend.

 

[FlagDUDE08]

Re: Obama XXIV: Forward ... pause ... rewind ... play

15 to 20 is a little high a standard for a non tech company...

False. Let's take a look at some good companies like Eli Lilly, Campbell's, American Eagle Outfitters (all where I take long position), none of which are tech companies. I see P/E of anywhere from 12 to 22. These companies are doing quite well, and are at decent point to make some trades, especially after posting good news.

 

[Bob Gray]

Re: Obama XXIV: Forward ... pause ... rewind ... play

Great post Rover, except where you missed or ignored every single relevant point. WHOOOOOSH!

It doesn't matter to me if you open your ears or not, it just makes you look even more stupid if you pretend facts don't exist simply because you choose to ignore them.

You aren't used to this? It's SOP for Rover.

 

[Rover]

Re: Obama XXIV: Forward ... pause ... rewind ... play

False. Let's take a look at some good companies like Eli Lilly, Campbell's, American Eagle Outfitters (all where I take long position), none of which are tech companies. I see P/E of anywhere from 12 to 22. These companies are doing quite well, and are at decent point to make some trades, especially after posting good news.

The S&P itself trades at about 15 times earnings on average and even Apple is at 15 times earnings, so to expect 20 times is a lot. Especially for a mature company in a lower growth industry. Auto companies themselves in fact trade lower as evidenced by Honda (9 times), Tata (5 times), and Ford (2 times). Granted Toyota is trading a lot higher but they seem to be the exception to the industry norm. I don't see how GM's standard should be to outdo Apple in investor's expectations.

 

[FlagDUDE08]

Re: Obama XXIV: Forward ... pause ... rewind ... play

The S&P itself trades at about 15 times earnings on average and even Apple is at 15 times earnings, so to expect 20 times is a lot. Especially for a mature company in a lower growth industry. Auto companies themselves in fact trade lower as evidenced by Honda (9 times), Tata (5 times), and Ford (2 times). Granted Toyota is trading a lot higher but they seem to be the exception to the industry norm. I don't see how GM's standard should be to outdo Apple in investor's expectations.

So now, you're going from "GM's too cheap" to "GM's not trading high because it's the industry's fault"? You're sounding like the CEO of an under-performing company. I'm still waiting for you to put your money where your mouth is and buy some GM stock. I don't care if it's only 20 shares, put your name on it!

 

[LynahFan]

Re: Obama XXIV: Forward ... pause ... rewind ... play

The S&P itself trades at about 15 times earnings on average and even Apple is at 15 times earnings, so to expect 20 times is a lot. Especially for a mature company in a lower growth industry. Auto companies themselves in fact trade lower as evidenced by Honda (9 times), Tata (5 times), and Ford (2 times). Granted Toyota is trading a lot higher but they seem to be the exception to the industry norm. I don't see how GM's standard should be to outdo Apple in investor's expectations.

15 (the S&P average) would be fine with me. You're correct that investors feel that the entire auto industry is suspect - call me crazy, but to me that seems like an argument AGAINST dumping more good taxpayer money after bad. To each his own, I guess.

 

[Rover]

Re: Obama XXIV: Forward ... pause ... rewind ... play

So now, you're going from "GM's too cheap" to "GM's not trading high because it's the industry's fault"? You're sounding like the CEO of an under-performing company. I'm still waiting for you to put your money where your mouth is and buy some GM stock. I don't care if it's only 20 shares, put your name on it!

Flag, I already bought Ford stock. The difference for me is that it was trading cheaper (2 times earnings vs 7 times).

Since you seem to have trouble keeping up, I don't expect GM (or Ford) to trade like a tech company. I do expect it to have some growth in the near term as general auto industry concerns fade away. Regardless, we're getting away from the point which is GM is a viable going concern which makes the bailout a success.

Lynah, no need to put any more money into the company. Needed restructuring happened. Not sure who's talking about another bailout except for one discredited opinion writer in Forbes and geezer's anonymous friend.

 

[LynahFan]

Re: Obama XXIV: Forward ... pause ... rewind ... play

Lynah, no need to put any more money into the company. Needed restructuring happened. Not sure who's talking about another bailout except for one discredited opinion writer in Forbes and geezer's anonymous friend.

You're right - I jumped the gun. My bad. I'll wait until the next time GM unions cry wolf over an impending bankruptcy to see what your opinion is then.

 

[FlagDUDE08]

Re: Obama XXIV: Forward ... pause ... rewind ... play

Flag, I already bought Ford stock. The difference for me is that it was trading cheaper (2 times earnings vs 7 times).

Since you seem to have trouble keeping up, I don't expect GM (or Ford) to trade like a tech company. I do expect it to have some growth in the near term as general auto industry concerns fade away. Regardless, we're getting away from the point which is GM is a viable going concern which makes the bailout a success.

Lynah, no need to put any more money into the company. Needed restructuring happened. Not sure who's talking about another bailout except for one discredited opinion writer in Forbes and geezer's anonymous friend.

Ford was good in 2009 because it didn't take the bailout. Also a consistent decline in the 233-day average across the past 6 months (something which Toyota doesn't have; theirs is fairly steady), and a significant spike in net income at the end of Q4 2011 (a little suspect to me). Debt's steady, not all that decent on annual cash flow; I can understand the low price.

 

[geezer]

Re: Obama XXIV: Forward ... pause ... rewind ... play

geezer, I'm posting facts and you're posting opinion. GM's earnings are a fact of public record. If they are cooking the books thanks to laws such as Sarbanes-Oxley their executives will be charged personally with criminal behavior and jailed. If they are getting taxpayer refunds you've yet to show any proof of this beyond some conversation you say you've had with an unnamed insider. Furthermore your notion that govt spending is propping them up leaves no explanation for their success in the Chinese, Latin American or North American (ex US) markets. Everybody's getting slammed in Europe so we'll leave that alone. Yet I'm not understanding the situation? Okaaay...and make sure you remember Dolly the Sheep's anniversary present this weekend.

One point which I already made which you may not have considered is that GM's earnings, which "are a fact of public record", count as "sold at full list price", tens of thousands of trucks manufactured over the last couple years to keep factories running which haven't actually been sold at all, but are simply parked on dealers' lots across the country so that GM is able to claim profitability. This would seem to be a bad sign for the company's future (just a wild hunch). But, I'm not interested in providing "proof" of these claims so I guess each of us will believe whatever claims we wish to.

Personally, I'm not interested in whether GM stock is a "good investment", since I have no money to invest anywhere in any case. The broader point is that the bailout hurt the industry as a whole by removing benefits of competition such as a pursuit of quality and competition for finite resources and market share and so on. By the extension of moral hazards, government and union co-ownership in any company also damages the ideals of working capitalism by introducing the uncertainties of executive whim into the market. We're all on the hook for that, and will pay for it for years to come in this and other industries, in many ways besides financially. So it's not a complaint against GM or its stock price, but against the government's involvement in the company's management. We'd all have been better off if they'd let it follow the normal course of bankruptcy rather than reward campaign contributors with the spoils. That's all I've got to say about that. Take it or leave it.

 

[Rover]

Re: Obama XXIV: Forward ... pause ... rewind ... play

. We'd all have been better off if they'd let it follow the normal course of bankruptcy rather than reward campaign contributors with the spoils. That's all I've got to say about that. Take it or leave it.

Final point on this as we've hashed through the other stuff well enough. A "normal bankruptcy" for GM meant shutting down the company and selling off the assets to pay the bondholders. I get that. Problem is, while a very small portion of the population would have benefited more (although they still would have taken a big hit) from this action, the vast majority of the other stakeholders would have gotten screwed as nobody was going to lend GM money at that time to keep them afloat. That means hundreds of thousands of jobs lost, pensioners thrown onto the US taxpayers back, and a huge loss of tax revenue. That's an easy choice to make, all apologies to Dr Demento. As this was all court approved like any other bankruptcy it seems it passed legal muster.

 

[DrDemento]

Re: Obama XXIV: Forward ... pause ... rewind ... play

Rover-Greatly appreciate the apology. Just hard to take it when i had to redeem at 9¢ on the dollar while many GM workers collected 5-6 figure salaries and benefits and some executives had to make do with 7-8 figures. I have relieved some of my bitterness against GM by buying our last 2 vehicles from their competitors.

 

[mookie1995]

Re: Obama XXIV: Forward ... pause ... rewind ... play

I don't have insight into the tiny make believe world that exists only in your mind Flag. What I do know is that a company about to go out of business doesn't trade over 20 bucks a share and 7 times earnings. One would think a person with a basic understanding of markets would know this.

paging enron!
paging bear sterns!

 

[unofan]

Re: Obama XXIV: Forward ... pause ... rewind ... play

You really think our credit rating wouldn't have been downgraded due to the federal government's deteriorating financial status, regardless of what the tea party did or didn't do? Wow. You could argue the timing might have been slightly different, but the downgrade (and probably more) had been in the cards for awhile and was broadly expected.

Read the statement of the credit agencies. The debt played only a minor role. Had they agreed to the grand bargain, we'd still have a AAA rating. The key factor in the decision to downgrade the debt was the fact that politicians were not only willing to let the U.S. default, but were actively pushing us to do so.

 

[unofan]

Re: Obama XXIV: Forward ... pause ... rewind ... play

To be honest, if you set your own debt limit, your credit rating should be decreased every time you increase your own limit because your debt level is close to your limit. If, in better times, you choose to increase your debt limit for inflationary purposes, that's understandable, but doing it because you can't pay your bills is just plain unacceptable. It'd be like me going to the credit card company when I have a $4950 debt on a card with a $5000 limit and asking them to increase my limit. What do you think they're going to say? I actually want you to answer this question, unofan.

Your premise is false. The scenario the U.S. faced was a self-imposed limit, not one based upon our finances. The "debt ceiling" isn't the amount lenders are willing to give us, but a self-imposed political hurdle to be wielded by the minority party for cheap points before doing the responsible thing and letting us continue to fund the already agreed upon budget. It's as though you borrowed $1000 on a $10,000 limit card, and said you weren't going to service that debt properly because you simply didn't want to.

If people are continuing to lend the U.S. money at record low interest rates, then we clearly aren't near our credit limit. Or, as I asked before, are you saying the free market is wrong?

Bob was saying that the Tea Party at most, changed the timing of when the downgrade was going to occur, not that one would ever happen. I was making a suggestion as to when it could have happened if there hadn't been a debt ceiling fight in 2011- This summer, when the credit agencies, you know, downgraded 7 European nations in one fell swoop.

The difference is those countries can't use monetary policy, because they're bound to the Euro. The U.S. controls its own currency (to the dismay of China and the oil shieks, but no one's forcing them to peg their currency/commodity to the dollar, so ******* them). The better comparison to the European nations would be Texas having a AAA rating while Nevada or Michigan becomes a junk bond level, since neither one has a currency.

 

[duper]

Re: Obama XXIV: Forward ... pause ... rewind ... play

One point which I already made which you may not have considered is that GM's earnings, which "are a fact of public record", count as "sold at full list price", tens of thousands of trucks manufactured over the last couple years to keep factories running which haven't actually been sold at all, but are simply parked on dealers' lots across the country so that GM is able to claim profitability. This would seem to be a bad sign for the company's future (just a wild hunch). But, I'm not interested in providing "proof" of these claims so I guess each of us will believe whatever claims we wish to.

It does seem odd that dealers would choose to buy cars from the company that they have no market for. I wonder what the agreements that dealers have in place with the manufacturers look like.

 

[joecct]

Re: Obama XXIV: Forward ... pause ... rewind ... play

It does seem odd that dealers would choose to buy cars from the company that they have no market for. I wonder what the agreements that dealers have in place with the manufacturers look like.

And the dealer is stuck with inventory and loans to purchase the inventory. If those cars don't move, he's in trouble.

Also, I believe that Uncle Sam made a big buy of GM cars. Guess that would be eliminated on the consolidated financials as "intercompany sales".

 

[Old Pio]

Re: Obama XXIV: Forward ... pause ... rewind ... play

It does seem odd that dealers would choose to buy cars from the company that they have no market for. I wonder what the agreements that dealers have in place with the manufacturers look like.

Many (most?) dealers get their cars "bulked" to them by the factory. The dealers have to take what they're sent and try to sell them as best they can. Dealers finance those vehicles, and have an incentive to move them quickly to avoid finance charges on their "floor plan." The largest, most successful dealerships order individually each car they receive from the factory. But even these dealers sometimes have to "eat" vehicles they didn't order. They do this to placate the company and keep their options open for acquiring more desireable models in the future.

 

[manurespreader]

Re: Obama XXIV: Forward ... pause ... rewind ... play

Read the statement of the credit agencies. The debt played only a minor role. Had they agreed to the grand bargain, we'd still have a AAA rating. The key factor in the decision to downgrade the debt was the fact that politicians were not only willing to let the U.S. default, but were actively pushing us to do so.

Agreed, and not only that the prospects of a deal down the road do not appear to be that bright. Maybe a further lowering would be in order.

Many (most?) dealers get their cars "bulked" to them by the factory. The dealers have to take what they're sent and try to sell them as best they can. Dealers finance those vehicles, and have an incentive to move them quickly to avoid finance charges on their "floor plan." The largest, most successful dealerships order individually each car they receive from the factory. But even these dealers sometimes have to "eat" vehicles they didn't order. They do this to placate the company and keep their options open for acquiring more desireable models in the future.

While it's true that sometimes dealers get sent vehicles, I don't think the unsold inventory as a whole is particularly high,( it's a matter of public record) especially by historical standards. Most of the time dealers are screaming for more trucks, not less. Mostly this appears not a matter of sales rate, but of inventory control going into a model changeover.
http://www.sfgate.com/business/bloo...e-07-Shadowed-by-GM-Unsold-3751920.php#page-1