What if you bought General Motors (old) in 1990?
US Consumer · Autos. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play0× · S&P 500 same money: $19,429
Every dollar is gone. General Motors (old) wiped out shareholders in the 2009 bankruptcy, so $1,000 invested in any of these years is worth exactly nothing today.
The story
For much of the 20th century General Motors was the largest industrial company on Earth, selling roughly half the cars bought in America at its peak. By 1990 it was already shrinking, losing share to Toyota and Honda while carrying enormous pension and retiree health-care obligations. A late-1990s SUV boom pushed the shares to a high around 2000, but profits depended heavily on trucks and on GMAC, its finance arm.
The 2000s unravelled the company. Rising fuel prices hurt SUV sales, and GM lost money year after year. When the 2008 credit crisis froze car loans, it ran out of cash and needed emergency federal loans. In March 2009 the Obama administration's auto task force forced out CEO Rick Wagoner, and on 1 June 2009 GM filed for bankruptcy. Its valuable assets were sold to a new government-owned company, while the old shell, renamed Motors Liquidation Company, was left with the debts. The old common shares were cancelled, and holders received nothing.
The lesson: 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.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 1990 | $42.00 | $0 | $19,429 | — |
| 1995 | $42.00 | $0 | $14,783 | — |
| 2000 | $72.00 | $0 | $4,626 | — |
| 2003 | $37.00 | $0 | $7,727 | — |
| 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
There was no good entry point: every starting year ends at zero. The same $1,000 in the S&P 500 from 1990 would be $19,429 today.
On this day
- 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
- 19 December 2008: Bush rescues GM and Chrysler
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. General Motors (old) is one of 258 positions on the wheel — including the ones that went to zero.
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