You saw it right. I have a friend (28) who works at GM and instead of the default 401(k) target fund, he is purchasing all General Motors stock. He tells us he trusts his future with General Motors because their P/E is very low. Not a troll post! Tell me what you think of his decision. #personal finance TC: 500 (this is my TC, and no. I’m not buying a single stock for my 401(k)).
Lol...I made a post few days ago that I am playing all in with SpaceX stocks..I know that I am taking huge huge risks but hey, I can also hit a jackpot.. What reasoning he told you for buying GM stocks?
He has faith in his company and that's his choice. Though it is risky to invest your retirement in a company stock, Given his age I doubt he has much in his 401k and he is not going to need that for a long time.
I wouldn’t put that “faith.” He is actively prepping for interviews to get the hell out :-D As I wrote above, the reasoning is low P/E ratio.
If he is getting out he will have to rollover his 401k anyway and will have to sell them
He is taking a risk but has insider information and hopefully is right.
What did you say in response? 🤔
Terrible choice. Companies have low PE for reasons. Car companies have huge capex, and those don't count toward earning. If you look at their cash flows, they are usually way worse than earning. GM also has multitude of challenges ahead, Tesla, overseas market competition, unions etc. etc..
My grandparents once did something similar and lost a lot of money.
How old is he? I can actually see GM go bankrupt within 10 years. They have lots of debt and a very tough future. That's why their stock is "cheap"
He is 28. I had put that inside parentheses above.
GM still is the largest automaker in the US with consistent profits over the last decade, The risk of them going bankrupt is much lower than any other American car company going bankrupt