Sunday, October 08, 2006

GM still unlikely to declare bankruptcy

Despite its dire financial situation, I continue to firmly believe that GM (GM) is exceedingly unlikely to declare bankruptcy. Yes, I believe that they will have to go through a truly radical restructuring in the coming years and five years from now won't even remotely resemble the old GM any more, bankruptcy won't be a part of that restructuring process.

Nonetheless, there will continue to be people chattering as if bankruptcy was just around the corner, but mostly those people are trying simply to talk down the price of the stock and bonds so that they can personally profit financially from trading on negative sentiment that they themselves are helping to promote. In some cases they are short-selling, and in other cases they are buying on the dips and profiting from the enhanced volatility for range-trading.

Ditto for Ford (F).

-- Jack Krupansky


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