The Tech Stock Investor

General Motors was once used as faithfully as the DOW as a barometer for the entire US economy. If GM dipped so followed the market. Lately, GM has suffered from several angles. Earlier in the year, GM was outsold by Toyota. This was the first time the company had been outsold globally, albeit by a narrow margin. Mounting health care costs and a beneficiary burden (which some estimate at 1 worker supporting 2.6 retirees) is slowly grinding away at GM’s ability to compete in North America.

GM’s other woes have usually followed prolonged strikes by labor unions. This has led to reduced sales and crippling some operations for weeks at a time. Management has cut jobs, closed plants, and done everything short of merge with another company to prevent the continuing crumble of the company. A preliminary agreement seems to have been met today and it looks like the strike may be over very soon. This pushed GM shares up a bit and tugged Ford’s shares up with it. Is the long term solution for GM a merger? Some have speculated once in a while that a merger with Ford could produce a more dynamic company since they both share a lot of suppliers and vendors in the supply chain.

Personally, I feel that the days of the multinational conglomerates which were formed in the US are numbered. Regulatory problems keep them from competing globally and domestically with foreign competition which has free reign and little regulation in their home countries. Keep yourself diversified and consider your portfolio warned.