Afamiii

General Electric: Genuine Risk of Collapse?

My first lesson (at any rate an early lesson) as a manager (at a Dow 30 company) went thus, "You've done very well this year, but don't expect every year to be this good, you need to put a bit away for a rainy day . . . investors don't really understand business, they expect profits to grow smoothly, but business is not like that, so you have to help them sleep well at night.'

Rightly or wrongly Jeff Imeldt is paying the price of keeping them awake.


On Nov 18 12:34 AM Osterix wrote:

> James: You convinced me. I am going to short GE. Why dont you short
>
> GE? According to the Disclosure, you have no position in GE. Why
> would you do all that research and then not act on it? It was particulary
> informative when you explained how GE manipulates reserves at the
> end of each quarter to hit its guidance. I thought I knew a lot but
> that was new to me. I bet GE is not the only one who pulls that stunt.
> What a bunch of suckers these analysts are who make a big deal out
> of corporate guidances. Just another Wall Street scam to fleece the
> suckers. I can see GE hitting 10 or below. Where is AIG right now?
>
>
> To gabe b.- How can you say GE is a "well diversified company?" In
> 2007 42% of its business was in lending and 30.7% was in infrastructure
> sales which is highly dependent on sales to developing countries
> which are highly unstable as a market. That is a total of 72.7% in
> just two business categories which currently have a very high level
> of risk. You either have an unusual definition of "diversified"...
> or a very subtle sense of humor that is beyond my comprehension.

Options Trader: Monday Outlook

Markets will always missprice stocks, particularly at times of high fear or high greed. This is NOT a deficiency of the market.

Financials and real estate companies are at all times highly leveraged (and in this cycle even more highly leveraged than normal) such that small changes in asset value can deliver large changes in shareholder value.

The average investor (and I include large institutional investors), who might be following dozens of stocks, has very little real understanding of the value of these assets (by now it should be obvious that even the managers of the assets have less understanding of their value - certainly not within +/- 10%.) And therefore little understanding of the value of the company (certainly not within +/- 50%.)

So owners play safe and sell rather than risk permanent capital loss, whilst the average buyer also stays clear.

Giving room for the super investor who has superior knowledge and understanding of the asset to deploy (smart) capital and make a superior return.

For sure many financial institutions will not survive this cycle downturn and those (minority of) investors who do have superior understanding must be compensated for deploying capital (and expertise) in a high risk environment. smartinvestorafrica.co...