Monday, October 27, 2008

Too Big to Fail, Consolidation, And the Decimation of My 401(k)

Now that GM is getting bailout money so they can buy out Chrysler, I wonder if this could be an aggregate trend. Finance and auto makes two, could other industry be next as part of the bailout/consolidation process?

I can see a Federally mandated shotgun wedding to save Chrysler from going under- too many factories/jobs are at stake. What other industry and firm might fit this profile? HMOs? Property management companies? Supermarkets?

And for people like Chuck, should you short a potential company that will be "eated" or long it at the bottom?

1 comment:

Chuck said...

I would think shorting would be a bad idea for 2 reasons:
1) Sine the company is already in the crapper, the profit of a short should be really low
2) There's always a risk that the SEC will step in and no allow shorting on those stocks.

My prediction for who's next in line for bailout.... airlines