Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Government Motors: How to Run a Business into the Ground—and Get Paid for It

Tuesday, March 12th, 2013
By for Profit Confidential

How to Run a Business into the Ground“Here’s what’s new about GM’s Strategy this year: Nothing. Our 2003 plan is the same as 2002.” This quotation was taken from General Motors Company’s (NYSE/GM) annual report in 2003, and it says a lot about what would become of the automaker. Governments have always helped the automakers, but looking back, it’s still flabbergasting to think of the amount spent in government bailouts.

General Motors (GM) is now worth $38.0 billion after receiving government bailouts and re-listing on the stock market. The company’s numbers come out in late April, and Wall Street analysts expect a three-percent gain in revenues. Ford Motor Company (NYSE/F) has a similar outlook (no government bailouts, but it got a line of credit instead). Chrysler is now owned by the Italian automaker, Fiat, which also makes “Ferraris.”

The first vehicle I drove was my father’s Ford “F-100,” the sixth-generation F-series pickup truck produced between 1973 and 1979. Being 12 years old and living in the countryside, it was fun wreaking havoc in fields and on gravel roads. When I got my driver’s license, we used to go to the drive-in theater, back the truck into a spot, and sit in the bed on lawn chairs to watch the movie. It was the ultimate “redneck” experience. I miss those days, for sure; they were the best.

My next vehicle was a clapped-out 1979 Jeep “Grand Wagoneer,” made by American Motors Company. Chrysler bought that automaker in 1987. I loved that Jeep. Both the truck and Jeep were reliable. The only problem they had was that they rusted out early—and bad, too. My Jeep had rust holes in all four foot wells, which made things pretty interesting while driving.

I like Detroit iron and the GM vehicle I drive now, even after repair bills and government bailouts. Nowadays, a lot of people drive cars from foreign-owned automakers, but to me, they just don’t have the same feel. German cars are great, but pricey, and their electronics fail over time. Japanese and South Korean automakers are typically reliable, but you can die of boredom. But that’s neither here nor there; to each their own.

GM, AIG, Bank of America, Citigroup—all too big to fail? I’m tired of that question. Domestic automakers are still a big part of the economy, but I’m on the fence as to whether government bailouts were the right thing to do for that specific industry.

  • Double your money every year for 24 years running?

    Since 1989, we've made 912 option picks, with an average annualized profit of 166.17% per recommendation.

    All from Lombardi's best option picks!

    Click here to learn more.

GM didn’t listen to its customers, and quality was problematic for the automaker. It didn’t plan for the spike in oil prices, and its management was totally arrogant. They just asked for government bailouts to make it all better.

History keeps repeating itself. Government bailouts will happen again. I just wish I had that old Wagoneer today; it would plow through anything.

VN:F [1.9.22_1171]
Rating: 7.0/10 (1 vote cast)
VN:F [1.9.22_1171]
Rating: -1 (from 1 vote)
Government Motors: How to Run a Business into the Ground—and Get Paid for It, 7.0 out of 10 based on 1 rating

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.