The End is Near for GE

I've written on this site for many months that GE is the ultimate unknowable stock and people should get out. Did you?

Search GE on this site and you find my other articles indicating what I think of the company.

I've always thought that GE Capital is completely unknowable - and leveraged to the most risky elements of consumer finance, equipment finance, commercial real estate finance and aircraft finance.  Essentially GE Capital is a hedge fund that makes up most of GE's profits and revenues.  GE also happens to sell light bulbs and turbines and run a TV network on the side.   Somehow, GE has a triple A rating and trades at a much higher multiple than any of the component businesses could possibly have as a standalone.

This entire unknowable hodge-podge of businesses in GE is now blowing up, because people are finally realizing that GE Capital is most of the company and has liabilities which could just overwhelm the rest of the thing. 

$9 may be the lowest point in 15 years.  I think it is also a good exit point if you haven't sold yet.

Herman Kline
Herman Kline: Herman is a recent graduate of Wesleyan College with a strong interest in finance and firm belief that General Electric is a scam on the public perpetuated by Jack Welch and Jeff Immelt that will ultimately fail to do hidden off-balance sheet liabilities. Herman's favorite place is on the side of a mountain or rock climbing wall.

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Comments

  • JDonahue

    February 27, 2009

    If GE were to start to fail, you would see the government come in to try to rescue the debtholders. The debt is spread throughout the financial system.

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