Fears of General Motors Bankruptcy

Fears of General Motors Bankruptcy cause GM stock to drop 25% to $2.70 down .92 cents and the Dow falls 254 points.

Today the White House rejected turnaround plans from General Motors Corp. and Chrysler and gave early investors in auto stocks a 25% drop.

Are you guys sick and tired of hearing how the White House might approve an automaker bailout?

Here’s  what I think is going to happen.  The  good old boys club will play the negative news causing the auto stocks  to drop even further from todays levels.

Then  when everybody is so scared and panicked dumping shares at rock bottom prices the smart  money will be buying on  the way down.  The smart money will be buying when there is blood in the streets.

All of a sudden the good news comes out that the White House has approved the turnaround plans just when the auto stocks are at rock bottom lows.

The good news will send shares skyrocketing up 25% or more in one day  but you would have to be on the inside or part of the good old boys club to take advantage of this move.

Here’s the shocker; what if the White House  rejcts all turnaround plans and let’s the auto industry go into bankruptcy or get bought out by some big bank.

If you were smart don’t buy any stocks because todays 25% drop is a big lesson.  If you had invested $10,000 2 days ago in General Motors stock you would only have $7,500 today. 

The stock market is very high risk so you need to be wise with your investments in the auto industry and all stocks.  I got the stock quote image from Yahoo Finance.