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How GE Compares to Other Banks

Unlike the CEO's of Wall Street's mega banks, the GE CEO today showed us that morality still has a place in the corporate headquarters -- when you haven't earned it, you have no moral right to it.Doing what's right trumps contract rights when it counts.

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?

General Electric: Not Quite a Value Trap, More Like a Value Pit

Alan's comment is well researched and a good analysis. But he then extrapolates illogical conclusions from his data. For one thing, he implicitly makes non-analogous comparisons between the balance sheets of GE and GM. True, GE shareholders will likely have a tough go this coming year, but to intimate that GE could fall into "the pit" in 2009 like GM did in 2008, is analyticallly nonsense, given that it intimates not only a short-term rocky road, but possible demise of a respected global company (in no way like AIG). GE certainly will survive the current world economic crisis, though a leaner company with less emphasis on GE Capital will result. In the long run that is good news for equity holders.

What the current economic crisis has produced is a lack of patience and a bias that everything will fail. That actually is the important good news -- it means that though bad times continue for the foreseealbe future, such negativity is the sure sign of better times are ahead for those with patience and knowledge that things are never as bad )or as good) as they seem.

International Overdiversification

Creating at least a trillion US dollars out of the air -- which the fed bailouts have accomplished to date -- can only mean that the US dollar will begin (perhaps it started already) a long and significant downward trend versus other major world fiat currencies. To be diversified in the ten US based international companies listed in this article is, I agree, a good way to have international exposure with a degree of transperancy not typical in the BRIC countries. Buy them, sit back, and smell the roses for the remainng years of our lives, with a semi-annual readjustment of one's portfolio based on two factors: market cap and percentage of revenues generated internationally (more difficult to ascertain).

General Electric: Genuine Risk of Collapse?

"longandshort" may be right. Publication of Mr. Quinn's morning/evening articles within twelve hours could clearly aid short sellers of GE. I doubt that was his intention. In any event, doosmday articles can benefit traders (probably the large majority of Alpha readers) and are, and should be, irrelevant to long investors who cannot conceive the total implosion of a well diversified international coglormerate. On this one, the longs have it!

What Does Warren Buffett See in General Electric?

The problem with GE is that their products are too good, not based on planned obsalesence. My wife and I continue to use a 1952 GE Double Oven, four burner, pursh buttom controls with various colors electric range that works perfectly. A better company -- e.g., Philco -- would have sold us several ranges over the past fifty-six years. Short the stock.

GE Capital Default Risk Soars

GE Capital's CDS spike is due to the abundance of fear in capital markets. Ask GE Cap how much AAA rated CP they have been selling each day lately. Me thinks they are doing nicely. Now may be the best time in a decade to buy GE Cap bonds and notes with attractive spreads over treasuries. Just compare the ten-year bonds. Yes, it looked similar for Countrywide, AGI, Leehman, Wachovia, but they all were sitting with then A rated debt, and their ability to raise capital for terms was just about nill. And, what a dynamic, diversified world player with resources and lines of credit which did not invest in class three assets over the top.