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October 1, 2019 | GM Strikes Are Not What They Used to Be

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

“As goes GM, so goes the nation.”  That was certainly true in the 1950s, when the statement supposedly was made by the company’s CEO during Congressional testimony. But it is not even remotely true any longer. GM still matters, of course, just not much.  Striking workers have idled 30 auto plants across the nation for 16 days, which, believe it or not, is the longest such shutdown in nearly 50 years. At issue are pay and benefits for 46,000 full-time factory employees. We should wish them good luck. And their employer, too, while we’re at it.

As far as Wall Street is concerned, because GM makes actual things and employs men and women who get their hands dirty, the company might as well be manufacturing lavatory pucks. The financiers love companies with ‘disruptive’ business models that put everyone out of work. GM, unfortunately, is a conspicuous disruptee. The last of the dinosaurs.

$100 Million Rounding Error

The automaker supposedly is losing between $50 million and $100 million per day, but that’s just a rounding error compared to the daily price swings in the shares of two glorified advertising agencies that portfolio managers cannot get enough of: Facebook and Google. GM shares are near the middle of a $20 range that has contained them for the last five years.  A glance at the chart suggests that unless the strike stretches on for another month or two, the stock will not likely fall more than an additional $1 or $2 before picking up structural support from a key low at 35.58 recorded on August 28.

The company reportedly has $17 billion in cash to tide them over; workers are getting strike pay of $250 per week. Can you guess which will win? Careful, because that’s a trick question.

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October 1st, 2019

Posted In: Rick's Picks

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