1 June 2009: General Motors files for bankruptcy
On June 1, 2009 General Motors, once the world's largest company, filed for Chapter 11, among the largest bankruptcies in US history. The government provided tens of billions of dollars and took a majority stake. Old GM shareholders were essentially wiped out, while a slimmed-down new GM emerged and returned to the stock market in 2010. GM was also dropped from the Dow within days.
The lesson: Too big to fail can still mean too big to save for the shareholders.
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 latest year on the wheel. 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
- 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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