GM and Google stock

One thing to consider about both GM and Google is the "index effect". GM is in the S&P 500 index and Google will be after the close of trading on Friday (and has been expected for months). Index funds which are committed to matching the S&P 500 index (Vanguard, Fidelity, et al) have no choice but to hold GM (with Google coming). That helps to keep the stock propped up. That's not the only factor at play here, but it may be enough.

Also, with rising interest rates, it's getting more expensive for hedge funds to finance leveraged short positions. Some of these guys with a short-term trading mentality may be "tacking some money off the table". If your hedge fund had shorted GM at $19, how would you feel about their performance right now? That's a psychological consideration they have to accommodate, regardless of where they think GM will be headed next year or even longer term. GM is likely to be a yo-yo over the coming few years, but how many hedge fund investors will tolerate such yo-yo performance?

-- Jack Krupansky