Small-cap investors welcome General Motors to their realm
Today's Financial News - Posted March 6, 2009
One of the nation’s strongest manufacturers has just slipped below the billion-dollar valuation level. That’s right, General Motors (NYSE:GM) is now considered a small cap. What’s next? How about Citigroup (NYSE:C) entering the world of penny stocks?
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): What a revolutionary time to be an investor. For decades, General Motors (NYSE:GM) was the epitome of the nation’s manufacturing strength. Today its reign is officially over. After slipping by more than 30% since Wednesday, the company’s valuation has dropped below the critical $1 billion level.
Yes, GM is now a small cap. Incredible.
Over the last few years, penny stock investing has been a hot trend. Everybody wanted in on the next hot company while it was still cheap.
Penny-stock investors have got to be jumping for joy these days. Some of the nation’s most beloved companies are within their grasp. Most notably, Citigroup (NYSE:C) hit a 52-week low of just $0.97 yesterday. Shares of the company fell by a staggering 98% since their recent high of $55.70 in 2006.
Of course, the same kind of investors that love a good, high-risk stock are not the kind of traders snapping up shares of these companies. These investors like speculative plays that offer at shot a huge returns when a tiny, unknown company breaks onto the scene with a major product innovation or unveiling.
Penny stockers are not into gambling. With absolutely no chance of shocking the market with a revolutionary product or innovation, GM and Citi have little chance of making investors rich anytime soon. Buy shares and you have far worse odds than betting on black.
We give up
The only thing that will bring these two back from the brink of collapse is government intervention… and this government is just about to ready to put its hands in the air and give up.
Who would have thought running a global superpower was so much harder than running an election campaign?
The nation’s unemployment figure has climbed to 8.1% and that is not including the folks that have flat-out given up on looking for a job or who have accepted low-paying jumps just to keep the lights on.
The next few weeks are going to be critical. If we can stop the downturn here, which I think we can, we are on our way to a strong recover. If not, this is going to be a massive chapter in the nation’s history book. We will start debating whether to use a “big D” or a “little d” when we discuss the calamity.
For now, all we can do is keep on working and investing. The country is still running, but one thing is for sure, there are fewer and fewer folks with a bright outlook.
Next Article: Tightwad Investing: McDonalds rules the value menu
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