How GM Borrowed a Boom From The Future

When events cause distant future cash flows to be pulled closer to the present, it does not permanently boost a stock’s value. Revenue that otherwise would have been booked over two or three years may have been front-loaded into this year. In the case of GM, a recent profit margin boom was borrowed from the future. When a borrowed-from future arrives, shareholders may be shocked by how rapidly earnings at an auto manufacturing business can fall.

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Dan Amoss

Dan Amoss, CFA, tracks aggressive accounting and other red flags that markets miss. He’s a student of the Austrian School of economics and Daily Reckoning fan since 2000. Agora Financial relies on Dan for macro market commentary as well as profitable plays like his 2008 call to readers to buy Lehman Bros. puts, which...

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