GM Stock Trading

Jack Healy:

...after several days of high-volume trading of General Motors shares, the automaker warned traders that its stock would have no value when the automaker emerges from bankruptcy.

I can see three explanations:

1. Sophisticated vulture investors making a gamble.
2. Unsophisticated day traders making a gamble. 
3. People like me who plan on buying a few shares and then demanding a stock certificate to hang on the wall as a memento of a bygone age. 

Comments

[JR]

Professor Bainbridge, why aren't investors selling short GM shares? After all, these shares will likely be worthless, so short-sellers could then replace the shares for almost no cost. Is the problem that investors will not be able to replace the shares once they are canceled? Couldn't this problem be resolved by a cash-settlement short sale?