The trumpets sounded this morning as General Motors reported its 2014 fourth quarter earnings. GM’s bottom line earnings exceeded expectations (although revenue missed and was down from last year) and the pre-market share price of GM immediately jumped over a dollar a share. Despite the victory laps being taken by GM and its friends in the media, it would be wise for individual investors to think twice before jumping on the GM bandwagon.
GM management often exhibits a political DNA which was implanted at the company as a result of the 2009 auto bailouts when the Obama Administration manipulated a bankruptcy process to benefit UAW allies. GM’s main goal now seems to be to give the appearance of financial strength while ignoring the fact that the auto industry is highly cyclical as well as brutally competitive. The strategy has not worked to date considering that, since GM’s IPO in late … Read More ➡