Taking Stock by Malcolm Berko

Dear Mr. Berko: In July 2004 when General Motors Corp. was selling for $46, you wrote a column advising people to sell their GM stock. I have 1,100 shares and wish I had done what you said because I own my stock at $53. When I wrote you last Thanksgiving and the stock was $6, you said: "If you won't sell the sorry thing then have the transfer agent issue you 1,100 certificates and use them for wallpaper." I didn't think that was funny because I needed solid advice, not that kind of stupid, worthless advice. Now that GM is bankrupt, is there any chance that my 1,100 shares will have any value higher than the current price of 60 cents? And when GM comes out of bankruptcy, will my 1,100 shares be turned into new shares of GM stock? If not, how can I become a GM stockholder again? I need advice, not more of your smart-alecky comments that make me and other readers mad. — H.A., Oklahoma City

Dear H.A.: Because of the serious nature of your question last year, I apologize for my poor taste and my inept attempt to be humorous. However, if you had followed my advice in 2004, you would be happy as a hog on ice and have a bank account with $50,000 extra dollars on deposit. If you had followed my advice this past Thanksgiving, you would have $6,600, or 1,100 share certificates, or probably the most uniquely wallpapered room in the great state of Oklahoma. Now you have bupkis.

In a bankruptcy distribution, the claims of common stockholders are always last in line. When GM filed for bankruptcy it claimed $172 billion in debt and $82 billion in assets, so there's not even a coattail or fingernail to hold on to. But you will be entitled to deduct up to $3,000 of loss on your 2009 tax returns. Well chitty chitty bang bang and hey diddle diddle, that's better than a smack on the nose with a garden hose.

GM's net worth is a negative $90 billion even after the billions of new government dollars bequeathed to management by U.S.

Treasury Department Secretary Timothy "Giveaway" Geithner. His plan calls for 10 percent of the new GM to be owned by existing bondholders, 17.5 percent to be owned by the United Auto Workers Union and 13.5 percent to be owned by the government of Canada. The remaining 60 percent will be owned by Congress, which means most members will determine which dealerships and plants will be closed, and that they will drive Cadillac Escalades buffed out with options.

Meanwhile, the U.S. Treasury will soon be offering GM bondholders, who really got the royal shaft, fists full of warrants that permit them to purchase up to 15 percent of new GM common stock on top of what they get for turning in their bonds. It's also my understanding that old GM shareholders will not be entitled to receive new shares.

Immediately after GM filed for bankruptcy protection, the New York Stock Exchange suspended trading in the stock. Still, you might be able to sell your shares on the OTC, or junk, market somewhere between 60 cents and $1 per share. The new symbol is GMGMQ. The "Q" indicates that the company is in bankruptcy. Immediately after the judge confirms GM's bankruptcy plan, those shares will be canceled and the symbol will be revoked. Meanwhile, as of June 8, GM shares were removed from the Dow Jones Industrial Averages after 80 years as an important component. Cisco Systems will replace GM on the Dow. Until that confirmation, GM shares will fluctuate in price and could even move above $1 a share as buyers — read, speculators — anticipate rising prices prior to the bankruptcy confirmation.

Meanwhile, you can still sell your shares for about a grand. But I think it would be worth that $1,000 to paper the walls of your family room with shares of GM stock.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at malber@comcast.net. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

COPYRIGHT 2009 CREATORS SYNDICATE INC.

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