GM, $hitibank removed from the Dow average

[marmar]

GM, Citigroup Replaced in Dow by Cisco, Travelers (Update1)
By Elizabeth Stanton


June 1 (Bloomberg) -- General Motors Corp. and Citigroup Inc., crippled by the first global recession since World War II, were removed from the Dow Jones Industrial Average and replaced by Cisco Systems Inc. and Travelers Cos.

GM, which filed for bankruptcy protection today, and Citigroup, the recipient of $45 billion in taxpayer aid, became the first companies since American International Group Inc. in September to leave the 30-stock average. Their shares have lost more than 90 percent since the start of 2007.

By replacing GM with Cisco, Dow Jones & Co. has removed automakers from the best-known benchmark for U.S. stocks, saying in an e-mailed statement that computers are as central to the economy as cars were in the previous century. Citigroup, until last year the world’s biggest financial firm by assets, is being replaced by a company it jettisoned in 2002 and that was once run by its former chairman, Sanford “Sandy” Weill.

“This announcement brings front and center the challenges facing the U.S. economy as it strives to remain competitive,” said Alan Gayle, director of asset allocation at Ridgeworth Investments, which manages $60 billion in Richmond, Virginia. “The Dow Jones Industrial Average is becoming less of an industrial average. It’s trying to reflect the broader economy.” ..........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aKJur2r3zEnc&refer=home

[panader0]

1. I heard on CNN earlier that GM is trading today and will be dropped at the

end of the day. It's stock rose from .70 cents to over .90. If I had some money, I would buy now.

[Statistical]

4. Why.?

In BK shareholders will be wiped out or devalued to a tiny fraction of their current value.

People don't understand that shareholder don't own a company.....

they own a company AFTER
secure creditors
unsecured creditors
pension obligations
accounts payable
tax obligations
other govt obligations.

if there is anything left after that shareholders will be restructured for cents on the dollar.

Secured Creditor & union pension fund are getting about $0.30 on the $.
Unsecured creditors may get $0.02 - $0.05.

Shareholders are at the bottom of the list and likely (unless judge finds a compelling reason) will simply be erased.

Not only that GM will be issuing so many new shares (all debt holders, UAW, pension, other creditors, and govt) will be issued "new GM" shares for their current obligations.

Lastly the "new GM" company will be private for 2 years making getting out of any investment nearly impossible for a small investor.

Even worse when GM finally does go public many of these organizations will need cashflow and sell as soon as possible to get some liquidity back creating enormous selling pressure.

If you like GM pick some up in 2 years not today.

Most of those buying GM shares today are "retail investors" looking for a lottery ticket and the institutions are happy to unload these nearly worthless share to them.

[bluestateguy]

2. That might cause the Dow to go up

nt

[izquierdista]

3. Don't look behind the curtain!

I am the great and powerful DOW, foreseer of all things economic!