Comments on: Will You Feel Sorry for GM Bondholders?

By: jesse

jesse — Thu, 10 Dec 2009 17:04:26 +0000

Maybe investing so much in the bonds of one company was stupid, but the way the Obama administration change the rules at the end of the game is what really hurt him. He has every right to be outraged!!

Modica only believed that the rule of law would be followed. People keep saying “You made a bad investment” when it only becomes a bad investment when the rules were changed by a govt that gave preference to the UAW for political reasons.

By: Four Pillars

Four Pillars — Sat, 16 May 2009 03:55:23 +0000

Unbelievable – thanks for pointing out that article. Investing in GM bonds is like investing in the Titanic….after the collision.

What an idiot!

By: TStrump

TStrump — Fri, 15 May 2009 03:27:38 +0000

I feel bad that he lost his savings … but too bad!
At his age, he should have been protecting his capital.
The rules of which companies are ‘blue chip’ and reliable have changed.
Many of these old names are no longer safe bets.

By: Rick Beagle

Rick Beagle — Fri, 15 May 2009 00:17:43 +0000

Employee Benefits Advisor is not a financial position (it is actually a Human Resources position), but rather an employee centric liaison between the company and their health care broker(s).

This guy made a poor decision and his quality of life in his golden years will be severely diminished. It is unfortunate, but this is the downside to a capitalist market – some people get hurt. I know this sounds cold, but after the Enron debacle, he should have gotten a freaking clue.

Peace.
Rick Beagle

By: kitty

kitty — Thu, 14 May 2009 23:30:32 +0000

The article doesn’t say if these are senior bond holders or not. If senior, they were supposed to be a very safe investment since in bankruptcy they are supposed to be paid first from the sale of company assets. At least this was before Obama choose to ignore the laws as posters above said. I am not sure how many of these bond holders have senior debt.

@cjbr549 – this makes me sick as well. I posted before in Chrysler thread on more or less the same topic.

Sure it is stupid to put all the money in one company bonds. It’s not like GM is the only company in the world – a minimum investment in a single bond issue is generally around $5000 (more or less for issues selling above or below par). So 700,000 is more than enough to buy many bond issues of different companies and in different industries. It’s not like GM is the only company out there that issues bonds.

About a paralegal at Citi. I am guilty of keeping too much in my employer’s (IBM) stock as well. Not 90%, but maybe around 40% of non-401K or 20% of all invest-able assets; nothing in 401K though. So I can understand. You buy it normally as part of ESPP with a nice discount – at least this is what we had before the company changed rules at which time I stopped participating. You may sell a little here or there, but since this happens with payroll deduction of up to 10% of your salary, you don’t think about it. Your company is doing well, and you think – oh I’ll sell it eventually. Then you think “if I sell it now I have to pay so much in capital gains”. I realize it’s a stupid way to think, but I kind of understand this woman from Citi. I bet this 10% to ESPP were the only money she was saving; plus banks had nice dividends.

But… Regardless if it is stupid or not, the bond holders are indeed treated unfairly here.

By: Matt SF

Matt SF — Thu, 14 May 2009 17:55:06 +0000

What’s funny is this guy is supposedly an “employee benefits advisor”. How can a guy in his position be dumb enough to put all his eggs in one basket? Worse yet, he got his family to do the same.

Personally, I feel more sorry for the GM employee.

By: My Journey

My Journey — Thu, 14 May 2009 17:03:01 +0000

It sucks…but maybe the guy should have read any PF blog, book, or article – when someone out there screamed diversify or live with the consequences. This reminds me of a real life scenario that happened with of our ex-clients.

She is a paralegal at Citi. We begged and begged her to diversify her 91% allocation of C. She didn’t. Followed C from 30s when we got a hold of her to the 3 something it is today.