[BC69]

I have been watching the GM situation fluxuate for over a year now and I have stood by and will continue to stand by some simple business rules. First and foremost is the business cycle on the firm level. We just need to remember that this is General Motors. You may not currently have much confidence, or see much growth in the short run, but this is a huge company that has been around for a long time. They are not going anywhere!

Economically the US is hitting its Post-WWII low as far as the Trade defecit, but its all a cycle and we will start to come back the other way soon. When we do, GM and other US manufacturers will begin to reclaim some ground. As a small example of what could happen: The Chinese have SERIOUSLY undervalued their Yaun for the purpose of staying competetive vs. the US dollar. Right now two things are beginning to happen, the Dollar is dropping in value, and the Yaun is beginning to be unrestricted, and hopefully will soon lose more restriction and explode. If this happens then from a countries point of view, to buy from China is more expensive, and to buy from the US is cheaper. The trade balance would change, and we would benefit. Other things that might change and help, Tarriffs, Union and Pension plans, Healthcare reform in the US...those are all big factors that could help companies like GM and Ford.

That is on a global economic level, but on the Market level. Right now GM is extremely weighted in the SUV market because they get a high return when they sell an SUV vs. selling a compact car. So as energy costs have risen they have taken a beating from the early 2000 SUV boom, which remember...they were doing great back then. Anyway in time they will completely move their market strategy and hybrids and small cars will take over again. But they need time, real time.

Its a cycle, and they will eventually come back around. So, since we don't really want to buy their cars right now, and we just dont see them as too appealing at the moment, what can we do?

Buy their stock. Its at record lows, I own shares, and bought more as it dropped during the summer. You just dont know what 5 or 10 years might do for this company. Just remember the first thing I said. It is General Motors!


Sorry for the Ramble.
Tim