InvictusRose

General Electric: Genuine Risk of Collapse?

There's a whole lot of misinformation on this blog, and little of it is coming from the author of the article. I have been playing the stock market since April of 1982 and have rarely heard such emotional baloney being passed for real analysis in my life. As I write this, GE has just broken through the $15 mark and heading for who knows where?

While the author has no position in the stock, he is constantly being accused of trying to get people to short the stock, as if he'd somehow benefit from the transaction. Meanwhile, people who clearly have a vested interest, via their 401K's or mutual funds, to see the stock go higher, are the main people doing the accusing. A bigger bunch of hypocrites would be hard to find.

There are a million comments here and it's impossible to address all of them, but here are some of the main issues that most seem to be missing:

Simply because a stock has been around for along time, is no reason to believe that it will always be around. Anyone proposing otherwise is worse than an idiot and deserves to lose every dime they invest.

Diversification is not always a good thing. In the stock and financial world we are currently experiencing, diversification merely means that you get to lose money in a whole host of industries rather than just losing money in one industry. It does not spread your risk, it simply increases it across a broader range of industries, since the baby is being thrown out with the bathwater. Just as the old chestnut, "a high tide floats all boats," so the opposite is true in bad times. Right now, there is no place to hide. Every investment is losing money, including pure cash accounts which are paying less than the rate of inflation.

Owning GE stock since Immelt took over was as good an investment as putting your money in a piggy bank paying nothing. The stock has been virtually stagnant during one of the most vital times in stock investing history. Anyone who couldn't make money in since 2001, shouldn't be investing or running any company. In fact, he shouldn't be allowed to breed for fear another generation of managerial nitwits will be allowed to pass on his techniques. The issue of whether Jack Welsh is better or worse is silly, at best. He at least made money when there was money to be made.

If you think that simply stating that Warren Buffet invested in the stock and that's good enough for you, then you are brain-dead. Buffet has made his mistakes over the years, and I'd be willing to bet that this is going to be one of them. But even Buffet, who must have had extensive access to GE's books before handing them money, attached onerous conditions to the loan. A 10% interest, rights to buy warrants below what was then market, and let's not forget that he bought Preferred shares, which gives him priority rights in any liquidation (something none of us could get). Anyone who interprets Buffet's actions as acts of faith and belief in management or the company, isn't paying attention.

LIkewise, if you think that stock dilution is a good thing, or putting up divisions for sale for which your name has become synonymous during one of the worst market conditions ever seen, is a good thing, then you'd probably do as "good" a job as Immelt in running that company into the ground. Who's shopping for an appliance division during a housing crisis? Sheesh. And no one but the author sees that as an act of desperation?

As for the so-called "safe" dividend--Let's see, they're paying 10% to Buffet, close to 8% to the common shareholder, and they're carrying nearly $5.5 billion in debt. Yesterday, they announced the recall of nearly 500,000 wall ovens due to a fire hazard. Uh, sure, you go ahead and count on that dividend. Insiders sure aren't counting on it. Total insider ownership is .06%, and that counts Immelt's going on a buying spree since Feb. 08 giving him about 1.6 million shares. But guess what? The reason they think he's the kiss of death, is because he'd been catching a falling knife. Of the 1.6 million shares. only 50K have been bought below a price below $26.42. So much for the boss having an idea about where his own business is going.

I could go on and on, literally forever. But the dreamers on this blog will just go on and on believing whatever they want because they have to. They have money on the long side. This may be the dumbest and most biased group of investors I have ever had the displeasure of reading in all my investing years. Perhaps only AAPL has more Kool-Aid drinkers in their group,.

Someone, please, for the sake of your family, please learn to read a stock chart or buy a book on investing. Emotion is your enemy here, not the author.