FrugalJim

During this week, the Democratic National Convention has been going on, but I haven’t watched a second of it.  Well, that’s only because we don’t have cable (or a TV right now ).

I was just pondering a thought:

Who would you rather work for?

Man A)  This man grew up in a well connected and wealthy family.  When it came time to go to college, his family pulled strings and got him into the college of his choice.  Throughout college he was “that guy” who would party like it was his job.  Graduation came and he proudly took the stage with a class rank of 894 out of 897.  He went on from here and through some weird strokes of luck that made him known throughout your industry and more help from the ole’ family, he’s now in the contest to be your boss.  He’s been in this industry for a very long time and is will likely not change things at the office too much.

Man B)  This man grew up in a very middle class family headed by a single parent.  Instead of relying on family ties, he used hard work and his smarts to work his way though college.  He did so well, in fact, that he went on to earn an advanced degree from Harvard.  Afterward, he worked his way up the corporate ladder relatively fast, and is now in competition to be your boss.  While this guy is definitely more of an unknown than “Man A”, he does have potential to become one of those bosses that could transform the company into something greater.

Of course I would pick Man B…

Yesterday, I bought General Motors stock for $10 a share.  This basically goes against all investing principles and is pure speculation.  The company is losing money, revenue is trending down, and they are likely to lose the title of “Biggest” car maker in the world to Toyota.

If I’m so negative about GM, then why would I buy their stock?  Well, it actually comes from one of the first investing books I ever read: “One Up on Wall Street” by Peter Lynch.  In it, he describes how the car market is cyclical, and people go through bad times and don’t buy cars, but once those cars start to get old, they all come back and buy new cars around the same time.  Also, Peter Lynch made a killing by investing in Chrysler during the early 80’s.  During this time, the company almost went bankrupt, but with some government help and a wonderful new product they came roaring back.  And of course, this product was the minivan.

Lynch said that the public was clamoring for a vehicle like this, but no one was building it.  The minute he laid eyes on what they were building, he knew it would be a success, and decided to invest in the company, even though the company was doing so bad.

I have a gut feeling (hence the title of the post) that GM is on a similar path.  Of course they don’t have a new minivan coming out, but they do have some good products in the pipeline.  2009 the Camaro comes out, 2010 the replacement for the Cobalt (which looks WAY better), and the biggest… the Chevy Volt in 2010.

The public is waiting for an electric car (I just spent $80 on gas yesterday) and they won’t be able to keep these things on the lot.  If the company can stay afloat until mid 2010, I think they have a good shot at a comeback.

Of course this is a big bet, but hey, I’m only 26.  Now is the time I should be taking on higher risk.