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GE's Dilemma: Sensible Business vs. Rating at Any Cost

I think p4jain makes a good point about shorting a high dividend flow, even should GE cut its dividend below 7%. Moreover, Mr. Saxena's argument about shorting the stock, of course is based on assumptions of a worsening global economy and he probably is right. But short sellers at the current levels of GE stock, in my opinion, taking a high risk. True, if the short selling is a judgement call on the company causing it to transform itself into a learner and more efficient comapny, that is the economic (vis-a-vis individual investor) benefit for shorts. In GE's case, it might cause management to transform the company in ways to make it more competitive.

However, speculators in shorts often get burned badly and shorting GE might be one of those situations. The good news is that Mr.Saxena is not advocating investors run to Treasuries and jump over a cliff.

By the way I have no troouble with Mr. Saxena being a short seller in GE and writing this article. It is very helpful for investors to know that those who write articles often are explaining their own investment moves.


On Jan 02 06:51 AM p4jain wrote:

> Rakesh, I agree with shorting GE and staying short. But shorting
> GE with a dividend of 7% and holding shorts till mid 2009 means you
> are going to PAY significant dividend shorting GE. However, shorting
> SPY and ETF are good idea or buying SKF is better. No dividends.
> How do you deal with paying the dividends for the shorts you hold?