We’ve written about General Motors many times before.
On April 26, 2012 I said: “Love ‘em or hate ‘em… either way, today looks like a good day to buy General Motors (NYSE: GM).”
This recommendation netted a 26% gain by January of this year, as GM’s stock moved north of $30 per share.
And that’s when I wrote again, this time saying: “Get out of GM stock… we’ve squeezed the juice from this lemon.”
For that call, I’m now eating crow.
After finding support just above $26 in late February, shares of GM have ratcheted higher all year, mustering a market-pouncing 28.6% gain in 2013.
Around the time I called GM’s profits “squeezed,” Japanese Prime Minster Shinzo Abe was on his headline-grabbing yen-devaluation campaign. He was hell-bent on boosting Japanese exports on the back of a weaker yen.
Naturally, Toyota (NYSE: TM) stood to gain from this move, while GM – on the other side of the dollar-yen exchange rate – stood to suffer. We even titled our piece, “Abe Wants to Kill GM”.
However, and interestingly enough, shares of GM and Toyota have moved in lockstep through it all. Take a look…
On a relative basis, it seems Abe’s monetary policies – while effective at devaluing the yen – have done little to give Japanese automakers an advantage over U.S. automakers.
Instead, it seems unprecedented monetary stimulus out of both countries is simply propping up all car makers, masking any underlying differences.
Either way, this is just another example of how central bank policies work to distort free-market enterprises.
You can shake your head… stomp your feet… and grumble all you like… or you can join us at Dent Research’s Irrational Economics Summit in November where we will help you make sense of it all.
And about my last GM call…
Hey, you can’t win ‘em all! But I’ll take a missed opportunity over excessive risk-taking any day. And I hope you’ll agree.
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