A recent AP story highlights the fact that shares of the old GM (before the government takeover) are not only still traded, but spiked to 13.9 million shares about 2 weeks ago. What’s that deal? Why would investors be buying shares in an ostensibly worthless company?

The short answer is, Who cares?

Whether you believe that shares of stock have value because they represent ownership in a valuable underlying business, or because the underlying business may be of some value in the future, the fact remains that shares of stock only have value because of one simple reason: other investors believe it does.

At the end of the day, that’s really the only thing at play, right?

So, it’s not entirely surprising that shares of MOTORS LIQUIDATION (MTLQQ.PK) (the old GM) are still being traded – there are still speculators out there hoping to make a quick profit before the company is terminated by the feds (once all of the General Motors debt has been dispersed).

It’s almost comical to look at the key statistics of the Motors Liquidation Company:

• NO P/E ratio
• NO Dividend yield
• -$56.845 Earning per share

and yet it still trades under a dollar with swings of up to $0.50 a day!

The article claims that many of the people buying this stock are ignorant investors thinking they’re getting shares of the new government owned GM:

“Industry analysts and regulators say two groups are buying Motors Liquidation stock: People who are confused and think they are getting shares of the new GM for cheap, and day traders or institutional investors hoping for short-term gains as others continue buying the stock.”

I don’t know. Personally, I think if people are dumb enough to think the “new GM” is earning -$56.845 per share, has essentially no information regarding sales, revenue, debt etc. then they shouldn’t be playing in the stock market anyway. I think most of the traders know exactly what they’re trading – a highly volatile penny stock, and they’re hoping to make a quick buck passing the hot potato before the jig is up.

Besides:

“GM and federal regulators say they have done all they can to warn investors, giving old GM the appropriate moniker of Motors Liquidation Co., issuing multiple public warnings and changing the stock symbol from GMGMQ to MTLQQ.PK.”

What more do we need to do to protect people here?

• 3 Key Signals When Timing The Stock Market I'm not a practitioner of market timing, and I'm not a proponent of it. That being said, I read an article about it in a recent issue of Kiplinger's Personal Finance Magazine that made me reconsider. To be fair, the article was more about timing big swings in the overall......
• A Sample ETF Portfolio for Alternative Investments. If you're looking for an ETF portfolio that provides exposure to assets other than stocks and bonds, you may want to check this out. The ETFs in this portfolio (from Kiplinger's magazine) are anything but the boring, old index funds that got the ETF started. The funds cover commodities like......
• Buy Stock in Facebook, Twitter Before They Go Public! The economy is taking its toll on IPO's, and like any good entrepreneur, Scott Painter is adapting. He's had a hand in 29 startups throughout his career, but with the latest recession, he's found that initial public offerings and acquisitions are a thing of the past. That doesn't stop Scott.......
• Will Your 401K Match Return? What will it look like if it does? If you're like many workers still lucky enough to have a job during this recession, you've probably seen your employer cut or eliminate the contribution match on your 401k plan. Mine did. My company match on 401k contributions was the first thing......
• How to spot an investment scam. In a single day, investment fraud can take away everything you've spent your life building. Couple that with the knowledge that scam artists are most active when times are very good, and when times a tough. You don't need me to tell you that times are tough these days, and......

• REVIEW: Getting Started in Stocks by Alvin D Hall (the Professor of Wall Street). In Getting Started in Stocks, Alvin D. Hall (A.K.A. the Professor of Wall Street) aims to educate the investor by providing the knowledge and background required for success. He does not argue that his way is best, or make claims to teach the reader how he can beat the......
• Buy Stocks Direct with MoneyPaper's Guide to Direct Investment Plans In a previous post, I discussed the benefit of investing in stocks directly using dividend reinvestment plans (also known as direct purchase plans, direct reinvestment plans, or direct stock purchase plans - there are some slight pragmatic differences here, but nothing that should prevent you from getting started and......
• What You Need To Know When Buying Used Hardware Refurbished network hardware is the latest thing for hip IT managers who consider themselves in the know. The used equipment is often renovated by various resellers and integrators, reset and error free. They are then sold in the secondary market at up to 90% off of list price. Products are......
• How to Go Into Debt to Get Out of Debt This really sounds like the ultimate oxymoron, but one of the best ways to get out of debt is to go a little bit further in. What’s that? First, to help this make more sense, let’s clarify – if you need to get out of bad debt, going into good......
• Riding the stock rollercoaster I own shares of Freddie Mac (FRE) stock as of the time of this writing. I paid $19.11 for them in March of 2008. (They had been at $59.52 just about a year earlier.) I thought they might eventually make their way back up to somewhere in the neighborhood of......