Ford (F), General Motors (GM) Rally on Stock Market
One of the important things to look for in terms of choosing stocks is the strength of the underlying fundamentals. One of the fundamentals you can look at is cash. And right now, it looks as though some of the carmakers will likely get more cash. The U.S. auto industry bailout may have failed in the Senate, but that doesn’t mean that Ford, GM and Chrysler are getting nothing.
Possible bridge loans through TARP
One of the very likely options that will be pursued in order to shore up the U.S. auto industry is the idea of bridge loans through TARP. These short-term loans would be made in order to help the automakers to get through the next couple of months. In fact, the automakers (well, GM and Chrysler, anyway) claim that if they do not get a capital infusion by the end of this month, they will have to declare bankruptcy. Ford appears to be weathering the storm, but would like to see some sort of financing available.
The news that the automakers are likely to get bridge loans is helping them on the stock market. Ford (F) and General Motors (GM) are gaining on the stock market (Chrysler is privately held) — even though the rest of Wall Street appears unable to get a rally going. There is definite optimism that the U.S. government won’t let the Big 3 fail, and investors are buying (albeit cautiously) shares of Ford and GM on the bet that when the money comes through, the companies will be able to make necessary changes to become fundamentally sound again.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
