Author Topic: Hmmm.. GE a good buy @ $32.50???  (Read 18487 times)

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Offline Woolly Bugger

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #15 on: April 28, 2008, 16:51:21 PM »

Frankly, I don't have the stomach to be an active trader.  Too many imponderables making it too much like gambling. :P  I'm not really risk-adverse, and don't mind taking calculated risks, but pure chance just never appealed to me.

It's GE for goodness' sake ...he's not trading penny stocks on the pink sheets ;D  Sounds like a good buy to me Woolly.  You bought it at its 06 support.  If it busts through that then you might pull out and wait for a lower entry point.  Long term, I think GE is about as safe as it gets.  So diversified internationally.  Good luck.

yeah, played it "safe" with GE when I shoulda bought AAPL at $140, closed today @ $172

5k = 6.1K 

 o-o


Offline phg

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #16 on: April 28, 2008, 20:25:32 PM »
Woulda, coulda, shoulda.... o-o

Since 2003, Apple has been on a tear, but keep in mind that on Dec 28, 2007 it was at $199.83, but dropped to $119.15 by Feb. 26.  A highly volatile stock....

Offline Woolly Bugger

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #17 on: April 28, 2008, 20:39:40 PM »
Woulda, coulda, shoulda.... o-o

Since 2003, Apple has been on a tear, but keep in mind that on Dec 28, 2007 it was at $199.83, but dropped to $119.15 by Feb. 26.  A highly volatile stock....

Hey, don't forget your talking to a former worldcom owner!

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #18 on: April 29, 2008, 10:10:05 AM »

yeah, played it "safe" with GE when I shoulda bought AAPL at $140, closed today @ $172

5k = 6.1K 

 o-o

I know.  I thought about Apple long and hard as it bounced along at $120.   o-o

Offline Silver Creek

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Offline Woolly Bugger

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #20 on: May 30, 2008, 12:39:51 PM »

Offline phg

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #21 on: June 02, 2008, 19:16:01 PM »
...and GE sets a new 52 week low.... ::)

I'm thinking that they will trade in this range until they report their next quarter.  If they beat expectations, then we may see some movement.  In the meantime, that dividend looks real attractive.

Offline glassfisher

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #22 on: June 02, 2008, 22:38:09 PM »
...and GE sets a new 52 week low.... ::)

I'm thinking that they will trade in this range until they report their next quarter.  If they beat expectations, then we may see some movement.  In the meantime, that dividend looks real attractive.

They should have a good qtr, the big miss last qtr was product that couldn't ship in 2Q.  In addition, they'll probably have some upside from appliances (when you sell a business you make darn sure it looks good on the books!).  I'm thinking buy now and all the way up to 32.   ;)
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Offline Silver Creek

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #23 on: June 09, 2008, 10:45:40 AM »
I posted a long reply about GE about a week ago but removed it because I recommended another stock instead of GE. Those of you that did get a chance to read it know that my recommendation went up since then. I don't want to be in the business of recommending stocks. However, I am a long time owner of GE.

I will just say this about GE and its dividend.

1. It is less than inflation when discounted for the taxes you will pay. So unless inflation goes down or the dividend rate goes up, buying GE for its dividend is a money losing proposition.

2. If you bought GE at 32.50 your yield is not 4.1%, it is 3.8% which is what you calculated yield based on $0.31 a quarter. I would figure your yield based on the year over year figure which is 3.6%. That dividend rate is now way below the rate of inflation even before discounting it for the taxes you will pay on it. After all GE's profit dropped 6% in the last quarterly report.

3. Unless GE starts to increase profits, it cannot continue the current dividend rate without hurting GE's ability to finance expansion from its cash flow. More cash to investors means less cash available to expand internally. This means increased borrowing which means less profits in the future. Dividends are by no means guaranted when profits are decreasing.

4. Most of GE's profits come from overseas. When the dollar weakens, a stagnant profit growth in the Euro becomes increasing profits when converted into the dollar. So its profit growth recently has been basd on the increasing weakness of the dollar. Two things threaten this profit growth. First is a strengthening dollar. If that happens, GE's profits will crater. Secondly is an oil based recession in the rest of the world which makes it difficult to sell GE products.

5. If you bought at $32.50, getting back to $32.50 does not make you whole. Your break even target at current inflation rates and capital gains rates is not $32.50 but $34.00/share plus transactions cost just to come out even at one year post purchase. The longer you hold GE, the more you have to get just to stay even. GE needs to grow a minimum of 15% (the capital gains tax rate) faster than inflation to stay even with inflation.

6. If the Obama get in look for capital gains rate to go up, putting even more pressure on stocks.
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Offline Woolly Bugger

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #24 on: June 09, 2008, 11:00:52 AM »
bought @ $32 sold at $37 bought back @ $32.50 still ahead net $237 -- tax sheltered plan

still sucking the $30 price.... we'll see where we are in 10 yrs for me and what 56+ years for my kids... :angel:

Offline Silver Creek

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #25 on: June 12, 2008, 16:15:27 PM »
GE now at $28.90, a new 52 wk low. Bernanke's comments about the threat of inflation is taking hold as are the comments of the European Central Bank's Jean-Claude Tricet. Both are talking tough on inflation raising the prospects of interest rate increases which would kill any prospects of a housing market recovery in the near future and making a true recession more probable. At this point, there almost certainly would be no interest rate drop given what Bernanke has said.

An interest rate increase by the Federal Reserve without an European Central Bank increase would serve to strenghthen the dollar versus the Euro. This would deal a double blow to GE. It would increase the cost of financing which would hurt the financial unit of GE and simultaneously deflate the value of foreign earnings. So less money coming in and the earnings from Euros is devalued vs the dollar = a double hit to earnings.

If the European Central bank responds with an interest rate increase of its own, this would keep the dollar relatively weak to the Euro BUT the increase in borrowing costs to foreign corporations would decrease the amount of products that they buy from GE. Simultaneoulsly currencies pegged to the dollar would also see borrowing costs increase and they will buy less from GE. Again a double whammy to GE earnings.

GE would be between a rock and a hard place and earnings will surely fall in either scenario unless there is an unforseen fall in oil prices which would stimulate the economy and remove the need for an interest hike.

Although the price of GE seems very attractive, if you do buy at current prices, you should protect yourself with a stop loss sell order at 15% below your buy price.
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Silver

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Offline Silver Creek

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #26 on: June 13, 2008, 11:44:55 AM »
Latest inflation data and its impact on GE:

"The CPI is up 4.2% in the past year and has risen at a 4.9% annual pace over the past three months. Inflation has overtaken weak growth as the top concern for financial markets and for some officials at the Federal Reserve."

http://www.marketwatch.com/news/story/cpi-rises-06-back-surging/story.aspx?guid={AA0B7528-6E79-438F-9488-D3F38BEC5B91}&siteid=yahoomy

"In a speech Monday, Fed Chairman Ben Bernanke said that the Fed will "strongly resist an erosion of longer-term inflation expectations." Those comments have raised expectations that the Fed's next move later this year will be to start raising interest rates."

http://www.latimes.com/news/la-fi-economy14-2008jun14,0,653996.story?track=rss

"In recent days, Fed officials have shifted their focus to inflation worries, citing pressures from relentlessly climbing energy costs, suggesting they may be preparing to raise interest rates again after a long rate-cutting campaign."

http://news.yahoo.com/s/nm/20080613/bs_nm/usa_economy_prices_dc_2

The 4.2 - 4.9% CPI rate is greater than the dividend return of GE even in a tax sheltered plan.

I've personally made a similar error in the past buying IBM in the early 90's during the tenure of John Akers thinking that it was IBM, the stock of widows and millionaires. Well IBM's stock cratered and it sold on my stop loss. I later rebought thinking that IBM was an even bigger bargain. The stock continued to fall and IBM was in danger of being sold off until Lou Gerster saved the company and turned it around.

I still own IBM because of Louis Gerstner.

CEOs make a big difference. Think of Apple before Steven Jobs returned and after he returned. It is a mistake to think of investing in GE because it is GE. I invested not in GE but in Jack Welch. If you buy or bought GE recently you invested not in GE but in Jeffrey R. Immelt. His recent moves have not been pretty. The clock is ticking on Immelt.

What is really worrisome is that GE's stock is not acting like it has hit bottom yet. Right at this moment the DOW is up almost 1%, the NASDAQ up 1.7% and all my stocks are up but GE, which is down almost .8%. We'll see how the rest of the trading session works out but for major stock like GE to be down in a rally is an indication that investors are not willing to buy GE even at it's current depressed price.
« Last Edit: June 13, 2008, 11:53:50 AM by Silver Creek »
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Offline Woolly Bugger

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #27 on: June 13, 2008, 12:02:48 PM »
it's a good thing that I only own 1500 shares..... o-o
« Last Edit: June 13, 2008, 12:04:26 PM by Woolly Bugger »

Offline Silver Creek

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #28 on: June 13, 2008, 15:28:39 PM »
Well I'm at 4 times the risk that you are. I have 6,000 shares of GE.

GE has had 3 splits totaling 12 to 1 since I bought it. It split 2:1 in 5/94, 2:1 in 5/97 and 3:1 in 5/01. All while Jack Welch was CEO. Immelt has been CEO since 5/01 and since then GE has not split once in the first 7 years of Immelt's management while it has spit 12:1 in the last 7 years of Jack Welch's management.

Sure, it is a different business environment but Jeffrey Immelt has had enough time to prove that he is no Jack Welch. Rather than command a premium because of Welch's management, GE now sells at a discount because of the lack of faith in Immelt.

The dropping share price of GE in the face of a mini rally is a sure sign of either GE stockholders selling into a rising market or a lot of short sellers selling into the market hoping for even lower prices next week.

It takes a lot of sellers or a few sellers holding a lot of shares to move GE's stock price down in the face of a rising market. Notice that this downward movement is happening on a large volume of almost 94,000,000 shares so far compared to an average daily volume of 58,000,000 shares. GE has also hit a new 52 week low during trading.

All of these indicators are negative. My worry is what do the sellers know that I don't? Is there another shoe that is going to drop? So I am really worried when I see that kind of reverse movement in a major conglomerate that should move with the market. GE should act like a mini mutual fund with all it's diverse holdings, but it isn't and that is a bad omen.
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Offline Silver Creek

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Re: Hmmm.. GE a good buy @ $32.50???
« Reply #29 on: June 13, 2008, 16:55:05 PM »
Final numbers, GE up .34% to $29.15/share on almost double usual daily volume of 115,755,168 shares compared to usual volume of 58,231,400 shares. Dow up 1.37%, NASDAQ up 2.09%, and broader S&P 500 Index up 1.5%. GE could be turning the corner but the high volume and weak gain shows weakness compared to the market in general. I'm more optimistic than I was midday.
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Silver

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