Money Maker: When a foolish gamble paid off.

It’s been about a decade now. Back then GM was on its last leg. The company had declared bankruptcy. GM had a bad habit of producing large, high margin gas guzzlers and ignoring the marketplace. Interest had been growing for fuel efficient vehicles. GM had a line of smaller cars to serve that market but it was losing money to other imports. I was in one of those rare positions where one finds themselves with money to invest what I consider serious money. I also had some experience with automotive stocks and I also had a burning hunch that I could predict the outcome of GM’s problems and make some money in the process.
My previous experience with an automotive stock started when I had just turned 21 (in 1991). I walked into a large investment house with the intention of speaking with the broker of the day. The broker of the day is an account manager who will process all the walk-in new business for each day. Brokers usually share this responsibility and by circulating the task each day in round robin fashion among each other. I had saved up about $3K and after much research was fixed on the idea of putting it all in to Chrysler which was almost at bankruptcy itself.

Lee Iacocca was just brought in to run Chrysler and he was building his reputation as the turn-around king. Iacocca was an industry leader and incredible motivator who could change the outcome of Chrysler. I had read about him and believed in him but I also had another nugget of information to back up my hunch. Chrysler was the maker of the M1A Abrams tank! The US would not let this company go under.
About a year later I ended up having to sell the Chrysler stock. The turn around and re-engineering of the company was in full force and the US did jumping and help them out with loans as I had suspected they would. The motto became “The New Chrysler”. While the much-needed changes were happening at the company I sold my share at a 60% profit. Not bad for my first attempt at stock investing.
Moving forward to the GM opportunity. I had recently refinanced my home from some much-needed improvements and the cash was sitting in the bank. I consider this article my foolish gamble because under no circumstances should anyone refinance their home and use the money to trade stocks, but that’s exactly what I did.
I started slowly. First, I moved 10K to TDAmeritrade and day traded a little. The I doubled down to 20K and kept going. I kept this up to until 50K was in. Some days I would be up 500 or 1400 others I would be down. All the while I kept reading about GM and their bankruptcy. They were now making the M1A Abrams tank but that by itself was not enough to convince me. The company was huge and I was looking for something short term. If I could keep the investment 1 year or less I would be happy.

What really interested me was Delphi, GM’s parts maker. At the time Delphi made about 90% of GM parts. If there was any issue with Delphi going under, it would absolutely crush GM. GM did not have a diversified group of parts suppliers. They had not plan B. In my mind it was as if the real car company was Delphi and GM just assembled and distributed the finished product. Delphi stock which was normally in the teens was trading and oscillating at under a dollar. There was talk of the government saving GM but turning it around would take a longer time. It terms of stick price Delphi would have to be granted loans first and GM second. In addition, the Delphi price would see the biggest bounce in the short term.
I went in at under a dollar a share to the amount of 50K. As soon as I was in, I placed an order to sell at 150% of the price I paid. The price had been flat for months but a slight increase had been seen just before I bought. A week later Appaloosa Management granted Delphi 2.55B in credit and my sell order had executed on the bounce. I placed another order at about a 30% lower stock price expecting the profit takers who had been holding on during the bad times to get out. Two days later they did and I was back in position with more shares than before. I placed another sell order if it hit 150% my buying price. Cerberus came in next about another week later with another multi billion dollar loan. With that new my order executed and I was out again. Finally, on the last attempt I doubled my investment and placed an order to buy after the profit takers. It executed and I placed an order to sell at 130% of my investment cost. A week passed.

I was in a meeting in one of the conference rooms at work. Typing away while my boss when on about something or other. I decided to check my stock positions in the middle of the meeting. Then I quietly panicked. I held no positions in Deplhi! I reloaded the page again and again. Had I lost my money? Was my account hacked and the funds wired to another country. A dozen panicked scenarios crossed my mind. Then it occurred to me to check my cash balance. It was all there safely in cash once again. Over 150K. Approximately 54K in 3 weeks. I was euphoric. I could not or did not want to listen to my boss right then. I excused myself and walked around the block to gather myself together. I was over the moon. I stopped trading and started focusing on the home improvements from then on.
I was very lucky. I understand that. I don’t recommend that anyone do as I have done. I don’t like gambling or play the lottery but every now and then I like to take my chances. I think it keeps thing interesting. Right now, I’m looking at SteemIT, as I think we all are.