12 February 2008: GM reports a $38.7 billion annual loss
General Motors reported a loss of $38.7 billion for 2007, largely from writing off tax assets it no longer expected to use, which was a polite way of saying it did not expect to make money for a while. It was one of the biggest annual losses in corporate history. Little more than a year later, in June 2009, the old GM filed for bankruptcy and its shareholders were wiped out.
The lesson: Accounting write-offs can be a company quietly telling you what it thinks of its own future.
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
- 1 June 2009: General Motors files for bankruptcy
- 18 November 2008: Detroit's bosses fly private jets to beg for aid
- 19 December 2008: Bush rescues GM and Chrysler
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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