Update on automakers
For some years, I've been very cautiously bullish on GM and Ford. On one hand, they escaped the financial/economic crisis by the skins of their teeth. If not for government intervention, GM would not have escaped, period. And of course they're pretty leveraged companies in a highly cyclical industry.
On the other hand, the recession has resulted in a lot of pent up demand for automobiles. For better or worse, we need cars to get around in the United States. The companies both had a huge overcapacity issue, which gave them far too high fixed costs. However, the financial crisis enabled them to shed excess capacity by closing plants, laying off workers and hiring new ones cheaper. And people put off buying vehicles during the recession while population has been growing, making for pent up demand. In a highly leveraged company, that demand can only help disproportionately on the way up (but yes, it's another story on the way down).
Basically, someone who's held GM or Ford stock since 1950 is probably not going to make their money back. But potentially, a new buyer of the stock could make some good money.
Cautious of buying into leveraged companies and getting burned like I did during the financial crisis, I bought Ford convertible preferred stock and Ford TARP warrants in 2010. The convertible preferreds were called, which was unfortunate. The TARP warrants unfortunately expired out of the money, which caused me to lose the premium I paid. In around 2012, I bought GM's TARP warrants.
As the economy in general has rebounded, Ford and GM stock have rebounded, and I've doubled my money on the GM warrants I bought. If I were currently looking to put more money into automakers, I would probably buy straight Ford stock. The economy looks like it will continue to grow slowly, so I am not worried about losing money in these stocks. Ford is in better financial shape than GM. The GM warrants expire in 2018, and I will likely hold these whatever happens to GM (unless it be some sort of material impairment in the company's financial position).
Some will observe that Millenials are less likely to drive than their parents, and that they're much more likely to live in big cities and rely on public transit. This is true. I, for one, hope the trend continues. However, demographic trends play out over considerable lengths of time. Much longer than it will take Ford and GM to recover.