Is now the time to Buy GM Stock IPO?

Many individual investors who are looking to buy GM's stock IPO were also folks who were unfortunately investors in the old GM. Some are even hanging onto stock from the old GM which took the name the Motors Liquidation Company (OTCBB: MTLQQ). This stock is merely a shell of the old debts and obligations that the New GM shed as it went though its bankruptcy proceedings.

Sadly, previous investors in General Motor's stock will have absolutely no preferential treatment when it comes to the new GM stock IPO this week. The only public investors who will have any chance at the first crack at the new GM stock are members of GM's dealer network. For everyone else, we're forced to buy GM stock after it goes through the various brokers that are distributing the stock for GM. Unfortunately, if you're working with E*Trade, TD Ameritrade, or Charles Schwab (none of which are offering shares to their customers), don't expect to get early pickings on this GM IPO!

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Buying the GM IPO by any calculation, is not a guaranteed win. Many investor's thought association with IPO's is big profits and guaranteed earnings. This type of thinking is left over from the days of the big tech IPO's - stocks like Google that went parabolic for months and would not stop. Unfortunately, those days are for the moment over and that sort of misplaced sentimentality is what tends to lose investors money over the long haul.

Another key factor to consider when reviewing investment potential of an IPO is the reason for it. There are two main reasons why companies file for an IPO: either to raise capital to invest in their business model, or to make money for the company's owners. In this case, GM isn't really looking to get money to expand their business horizons. Their mainly looking to get the government monkey off their back and lose the moniker "Government Motors."

While there isn't any huge rush, the main incentive to get this IPO moving is probably due to the public scrutiny GM and politicians have faced over the last year and a half since GM's bankruptcy. Having an IPO and paying the governments of the US and Canada back its debt, even if not in full, is the quickest way to accomplish such a measure. If there wasn't a public stock offering, even at an estimated annualized profit of 5 Billion a year, it would still take the better part of a decade to reduce the governments ownership of GM to zero (figuring in 0% interest of course). Because this IPO only consists of approximately 20% of the total value of GM, you can count on billions more shares of GM floated onto the open market after the initial IPO which is only going to hold the price for the stock down!

Last but not least: Don't be one of those people who lost a ton of money on GM stock and hope to make it back by investing in their IPO! Thats an example of getting emotionally attached to a position. What's gone is gone and the only way to make it back is to focus on companies that have really good future business prospects. Once GM finishes its total stock distribution and begins to pay dividends again will it really be a stock worth buying for your retirement fund.

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Because of the difficulty of average investors to participate in GM's IPO, the huge 80% stake outstanding which is almost guaranteed to hit the market in the next 5 years, and the fact that GM will not pay a dividend until all of its debts are cleared, I have a really hard time recommending that any average investor looking to retire on GM's stock buy into this IPO looking to hold it out for the long term.

However, that being said I know that there are many other stock buyers out there who are just looking to buy GM stock for quick speculative gains and then exit with profits. Due to the pent-up emotional demand and attention that the media is paying to GM's stock IPO, I believe this could be a viable option. In fact, I know many stock pickers that are currently recommending it. I've been using a few different services to keep me up to date on various merger, stock split, reverse merger, reverse stock split and IPO opportunities in the market. In these markets I've found that being able to trade quickly and profitably out of stocks like these to be a much safer investing method that buying a stock and relying on hope!

If you're curious to see what these stock pickers are currently saying about buying GM's IPO stock, Check out this page at www.FindStocksToBuy.com. On this page you'll find a few of the gurus that I follow. See for yourself what they say about all of this GM stock IPO hubbub!