Posted by Tim Stobbs on June 1, 2009
The writing has been on the wall for a while, but it was still nice to see it come to an end. GM filed for bankruptcy today. Perhaps what struck me as weird about this entire affair was some people didn’t see it coming to some degree. I mean they just ignored that fact the company had billions in losses leading up to the crash in 2008. It was really only a matter of time ‘when’ this happened rather than ‘if’ it was going to happen.
So now with some reorganization and some serious government ownership, we get to find out if GM really can compete in the market. In the mean time here is the top five things I learned from GM:
- Just because your big, don’t mean you are good. Don’t assume any company is a good investment until you’ve looked at the numbers and studied the company. Size just means it takes longer for them to fall and hit the ground.
- Stocks are risky. So you have to look at what you own at least annually and decide if you need to accept your losses and move on. Companies can and do fail, so always recall that when you buy stock.
- Even corporate bonds have their risk. A bond does not mean you will always get your money back as several GM bond holders are finding out now. Even governments can have their risks, but often much less than companies.
- You always need a good product. A good product for a company is like water to a fish, if you don’t have it you will soon be gasping for it.
- Control your costs. Regardless of if you are a household or a huge company you can’t afford run away costs. Living beyond your means is just a bad for a company as it is for you.
So what did you learn from GM failure?