Zombie GM Stock is Proof Humans Are Not Rational

I have mentioned this in the past, but its one of those absurdities that refuses to die:

“Whether it’s a matter of ignorance or greed, people are still buying General Motors stock, even though the company and the government have warned that the shares will someday be worthless.

Investors are picking up millions of shares every day, thinking they’ll profit from what is really a hodgepodge of outdated factories and a pile of debt left behind when the new General Motors Co. exited bankruptcy court protection. Instead, they could end up losing money very quickly. The price of the shares, currently under $1, has ratcheted up or down as much as 50 cents in one day.

On Thursday, investors traded 13.9 million shares, and the stock closed at 85 cents, down 4.1%. The old GM stock had a higher trading volume than big, viable companies like retailer CVS Caremark, banker Capital One Financial Corp and consumer products maker Procter & Gamble.”

Irrational seems to be the standard (and we didn’t even have to write a book to prove it).

Don’t come crying to me when they halt GM trading on a permanent basis.


Why Isn’t GM $0.00 ? (May 27th, 2009)

Traders keep buying old GM stock, despite warnings
Tom Krisher and Tim Paradis
Associated Press, August 20, 2009

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