19 December 2008: Bush rescues GM and Chrysler
After Congress failed to pass an auto rescue bill, President Bush announced $17.4 billion in emergency loans for General Motors and Chrysler from the bank bailout fund, saying a disorderly collapse was not a responsible course. The money bought time but did not fix the problems. Both companies filed for bankruptcy in 2009, wiping out GM's old shareholders before a new GM went public in 2010.
The lesson: Government rescues can save a company and still leave its shareholders with nothing.
What it meant for investors
$1,000 in General Motors (old) at the start of 2008 → $0 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2008, the year it happened. General Motors (old) went to zero, so the position is worth nothing at all; the index turned the same money into $4,626.
What General Motors (old) teaches: A famous name and enormous scale offer no protection to shareholders: in a bankruptcy, creditors are paid first and common stock usually goes to zero.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2005 | $40.00 | $0 | $5,763 |
| 2007 | $30.00 | $0 | $4,789 |
| 2008 | $25.00 | $0 | $4,626 |
green = beat the S&P 500 · red = lost money
What if you bought General Motors (old)? Every starting year and the full story →
More General Motors (old) history
- 12 February 2008: GM reports a $38.7 billion annual loss
- 1 June 2009: General Motors files for bankruptcy
- 18 November 2008: Detroit's bosses fly private jets to beg for aid
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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