What do you think about GE stock? (retirement plan, dividend, investment)

[X-Greensboro Resident]

Hello everyone! I would like to hear your objective view about GE stock. I have bought a few hundred shares for obvious reasons (solid company, very cheap stock right now, potential huge upside etc...) in the last couple of weeks, but I'm starting to think it's not a very good investment. Any thoughts?

[floridasandy]

they have a very large ratio of outstanding loans to equity and the quality of their loans is opaque so it wouldn't take much to tip them over. an approximately 2% increase in defaults on outstanding loans would wipe out their equity (8 billion equity in december vs 400-600 billion in outstanding loans) so i personally would say no to GE.

[sterlinggirl]

Originally Posted by floridasandy

(8 billion equity in december vs 400-600 billion in outstanding loans)

If that's true, they're levered at 50-75:1. That's scary....

[thebigr]

When it reaches $5.00 I would buy it. And not any sooner. GE has a big financial arm and we all know how the financials are doing.

[rubber_factory]

I bought some the other day, with the knowledge that GE Capital is a big question mark.. but I'm just betting that they'll be around in 15 years.

[jimmyP]

Originally Posted by rubber_factory

I bought some the other day, with the knowledge that GE Capital is a big question mark.. but I'm just betting that they'll be around in 15 years.

There are definitely issues. Their tangible equity is pretty low for the amount of debt they are carrying ($650-700B). The balance sheet is misleading. They have done a lot of acquisitions over the past few years and carry a lot of "goodwill" on the sheet. We all know what that's worth today.

I think they are a survivor but I believe you will have a chance to get in under $5.00, maybe under $4.00

Management has lost a lot of credibility lately with double talk. Very opaque company. I'm a former employee and I am not as confident as many.

[Oildog]

It was a core stock of my retirement plan, and so it looks like I'll be working a little longer than planned. With that said I have bought on the way down, last purchase was @ 10, before they cut the dividend. In terms of too big to fail, I think this is it but I'm starting to think I might be throwing money away that could be better spent in the next couple years if I buy more. But I'm a sucker, and will buy another 100 or so if it hits 5.

[Mathguy]

I worked for a subsidiary of GE for a couple years and was alarmed by some of the things I saw there in terms of making the numbers work. I'm not going to even touch the stuff I saw that was frankly fraudulent IMO but just the game playing of selling a building and leasing it back to yourself to help make that years numbers. Way too much effort put into accounting gymnastics than in actually improving the business and making damaging long-term moves to reach short-term goals.

This is all fine and good with manufacturing etc. but frankly, when it comes to financial products and services that can have fuzzy values I don't trust them. Just too much power in the hands of their business leaders and pressure to "make the numbers"....get promoted and move on that next better job and let the next guy pick up any messes.

[broadbill]

Sounds like everyone who is saying "no" to GE is looking at a 2-5 year outlook. What about those interested in a very-long long term investment? Perhaps as a cornerstone for a child's portfolio who wouldn't be cashing in on the stock for a good 20 years? 20 years of dividend reinvestment and possible stock splits can turn out to be a sizable appreciation...

[davidt1]

Originally Posted by X-Greensboro Resident

Hello everyone! I would like to hear your objective view about GE stock. I have bought a few hundred shares for obvious reasons (solid company, very cheap stock right now, potential huge upside etc...) in the last couple of weeks, but I'm starting to think it's not a very good investment. Any thoughts?

If you bought in the last couple weeks like you said, then you probably lost as much as 50% on this stock already. It traded at around $13 at the beginning of February. As of now, it's around $6.72 a share.

I am more interested in the reasons you listed for buying this stock: "(solid company, very cheap stock right now, potential huge upside etc...)" That's a mouthful, but what does any of it mean? That's a rhetorical question, by the way.

In some ways, you remind of a few folks here. There was a person who bought C at $8 or something like that and thought he was gonna make a killing. Then there was another person who thought GM was super cheap at $6 or something like that. A $2 stock is expensive if it goes down to $1 after you buy it. On the other hand, a $100 stock is cheap if goes up to $150 after you buy it.

I could say more about this stock, but I am too lazy and incoherent to do a half-decent job. Instead, I will post some data considered to be useful in determining what stock to buy and when to buy it. Good luck, huh!