Two Ways To Play: The GM Car Wreck
Strengthen your portfolio in good times and bad.
According to Bloomberg, General Motors (GM) said it might not have enough cash to keep operating and will fall "significantly short" of the amount it needs by the end of June. Unless, of course, it gets government funding and raises more capital - or the car market suddenly improves.
The largest US automaker announced a third-quarter loss of $4.2 billion today - and said cash levels plunged from $21 billion at the end of June to $16.2 billion on September 30th. Because the company requires a minimum of $11 billion just to pay off its bills, it doesn't have a lot of cushion.
GM has lost almost $74 billion since the end of 2004. This is the bleakest outlook in its history.
From the Bull Pen: We mentioned that GM should be on everyone's radar. Not for a play, but because it could very well be the next credit event. This dovetails with the belief, by some professors, that the S&P 500 could be headed past the 840 level. That said, cash isn't such a bad option.
From the Bear Cave: Professor Quint Tatro mentioned a short-side play in Apple (AAPL) on the Buzz today. Could the stock be headed for a big break lower on the weekly chart? Remember to set a tight stop if playing a downside attempt.
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