General Electric Company (NYSE:GE)

CAPS Rating: 4 out of 5

The definition of a conglomerate, GE offers everything from light bulbs to power plants, jet engines to water processing, financial services to 30 Rock.

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Player Avatar TopAustrianFool (64.99) Submitted: 10/11/2011 9:49:02 AM : Underperform Start Price: $14.49 GE Score: -12.14

The government gravvy train is about to make a stop and GE is getting off. Too much invested in alternative energy junk scinece and at some point the govt money will dry up.

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Member Avatar TopAustrianFool (64.99) Submitted: 10/13/2011 10:50:10 AM
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The coming deflation in China will make imports from China more expensive in the US. Once govt. in the US decreases subsidies then there will be a major capital structure readjustment in China. Most US firms expanding production in China will get hit hard. Like most govt-dependent monopolies GE is done.

Member Avatar cashforever (80.32) Submitted: 2/19/2012 10:47:55 PM
Recs: 3

203 Billion market cap: Done. Just like that huh?

Member Avatar georgevtucker (96.44) Submitted: 5/11/2012 9:28:27 PM
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Point of clarification: do you believe that the government "gravvy" train is overinvested in alternative energy, or is it that alternative energy itself is "junk scinece"? GE is a highly diversified conglomerate and they make a lot more than wind turbines.

GE is 21st on the list of companies that receive the most money from the US government. Here are the companies above them (2010 list, most recent I could find):

LMT
BA
NOC
GD
RTN
UTX
LLL
OSK
SAI
BA
Cerberus capital management LP
MCK
CSC
URS
Bechtel Group
BAH
KBR
HRS
HUM
HNT

Do you believe there will be a plunge in all 20 of these stocks when the "gravvy train" stops? Or just GE? Think your beloved defense stocks will be hit so hard by your predicted "major capital structure readjustment" -- what does that mean, anyway? Are you talking about capital or about capital structures?

Finally: when you wrote your post were you also trying to imply that alternative energy is "junk scinece" as well? I can't quite tell whether you were attempting to impugn all science, or only research into alternative energy, or only GE's particular research paths. Bet a dollar you don't know either.

Member Avatar TopAustrianFool (64.99) Submitted: 5/30/2012 9:57:17 AM
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"Do you believe there will be a plunge in all 20 of these stocks when the "gravvy train" stops? Or just GE?"

Pretty much, most of the stocks heavily invested in alternative energy should collapse with the Bubble. Some will be deemed "Too Big To Fail." Maybe, GE is one of those.

"Think your beloved defense stocks will be hit so hard by your predicted "major capital structure readjustment"

I don't love defense stocks, I stay away from them. But defense companies, although wasteful are somewhat lean and concentrate making weapons, which will always be on demand from govt. So its a bit different, nevertheless speculative.

" "major capital structure readjustment" -- what does that mean, anyway?""

It means that govt subsidized and regulated markets, along with Fed easy money (artificially low interest rate) policy produce "malinvestment" due to the perversion of incentives by unsustainable demand. Basically, the govt subsidies produce a demand of products like solar panels, wind turbines, and other alternative energy products, which is not real, because gasoline, NG and nuclear will always be cheaper. So, once the subsidies end and the Fed increases interest rates, in order to avert "run-away inflation", then companies go bankrupt.

The liquidation of the capital equipment and lay-offs, shift capital from these unproductive endeavors into real free-market industries. Of course, that is only if the govt doesn't intervene with "Bail-outs" and the Fed allows for free market interest rates. If they do intervene, then a new bubble starts in a different sector in the economy.

Remember, the Housing bubble burst in 2008? The govt and Fed intervensions to save the economy have produced and continues to feed the Alternative Energy Bubble. Companies like GE (diversified) will be the next Country Wide, Lehman Bros. or BAC and C which got "Bail-outs." All of these were as you say; "diversified."

"when you wrote your post were you also trying to imply that alternative energy is "junk scinece" as well? I can't quite tell whether you were attempting to impugn all science, or only research into alternative energy, or only GE's particular research paths. Bet a dollar you don't know either."

I don't have a problem with research in alternative energy. I am a scientist and it is my opinion that good research shows that the alternative energy options of wind, and solar are shown to not be viably cheaper than Oil, NG, Hydrothermal and nuclear if the analysis satisfies the 2nd Law of Thermodynamics.

But it is to ignore this, and then investing in capital equipment to produce commercially the solar panels, the wind turbines and the batteries, and the electric cars, and everything else necessary to produce these wasteful forms of energy what I "impugn." Why is the market ignoring this, because the Fed provides easy money to invest and govt creates an artificial demand. That is your next huge Bubble.

Great questions!

Member Avatar TopAustrianFool (64.99) Submitted: 5/30/2012 2:26:20 PM
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"GE is 21st on the list of companies that receive the most money from the US government. Do you believe there will be a plunge in all 20 of these stocks when the "gravvy train" stops? "

It is not only receiving money from the overt gravy train, but also the way companies benefit from govt regulation and Fed low interest rates. For example; AMRC's business is solely originated by regulations. Its artificial, because without the coercion of govt laws, no one would waste money changing into more expensive green energy.

Now, you may argue that the regulations are not going anywhere, but I will tell you that the waste of wealth in complying with these regulations is costing jobs. Sooner or later politicians will understand this and when those regulations and subsidies are repealed those companies will loose big. You can try to time it, but don't get caught with your hand in the govt cookie jar.

Member Avatar DonkeyJunk (35.49) Submitted: 6/15/2012 11:50:27 PM
Recs: 1

All legitimate concerns that could have a near-term effect. I tend to focus more on the strengthening Capital unit, the awareness by GE that fossil fuels are still going to relevant for a while by buying up oil-related infrastructure and retrieval companies, their focus on health care, and, of course, their largely stable industrial arm. I'm glad to see they unloaded a majority share of the t.v. channel, which they didn't seem to manage well, allowing them to devote resources elsewhere. Do I think GE is going to be a rocket-powered earnings beast? No. But I think their dividend is steadily rising, the balance sheet is in much better condition than it was when the dividend was twice as large, and I can see the share price passing its pre-recession highs in a few years. Not a market beater, but the dividend will make up for it.

Member Avatar callumturcan (95.39) Submitted: 8/15/2012 11:23:33 PM
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In 2010 GE made about $14.2 billion dollars, paid no taxes, then took in $3.2 billion from the government. http://www.dailytech.com/GE+14B+USD+Profits+Pays+No+Taxes+For+Last+Year+Gets+32B+Tax+Benefit/article21230.htm
It is a valid point to make that when the "gravy train" stops, GE will have to start paying its fair share. It won't go bankrupt by any means, but its earnings will be affected very significantly.

Member Avatar Jarmbru (< 20) Submitted: 9/28/2012 7:05:47 PM
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@topaustrianfool per your statement, "I don't have a problem with research in alternative energy. I am a scientist and it is my opinion that good research shows that the alternative energy options of wind, and solar are shown to not be viably cheaper than Oil, NG"

I think when we take into account the already well known and documented costs of hydrocarbon fuels (e.g. health, agriculture, the atmosphere) and add to that the huge costs of potential destruction due to global climate change (no, I won't even respond to those who deny this, nor to birthers, nor flat earthers either) we will discover that the cost of hydrocarbon fuels is much higher than alternative energies. Sadly, I don't believe this will be addressed by our financial or political systems until there is an extreme crisis and maybe not even then. With respect, I could be wrong and so could you. Time will tell. As per hydrothermal, I don't know. Per nuclear, ask Japan and the Ukraine and consider the huge additional cost of remediation to all those downwind.

Member Avatar Jellywig (< 20) Submitted: 10/19/2012 11:32:44 AM
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Oh no, GE just dropped 2.6 % today! I'm only up 48% instead of 51% yesterday! I should have known better than to buy the most owned stock in Congress...

Member Avatar TopAustrianFool (64.99) Submitted: 8/6/2013 10:14:47 AM
Recs: 2

Jellywig,

You may be up 48% but GE barely beats the market, when it is so easy to trash it with other companies. The joke's on you friend.

Member Avatar mariavas (< 20) Submitted: 7/21/2014 9:51:21 PM
Recs: 1

I do not mind if my entire portfolio "barely beats the market", it still does beat the market. I support the statements about the global warming. It is real. Most importantly not only the Federal government has to support "green", but local governments are taking steps too. Yes, I do reside in the green state of California. Guess what, all new buildings have to comply with LEED. New construction has to be "energy neutral" or "net zero" by 2020 for some and by 2030 for all. How do you do that? In short PV, wind, geothermal. My next car will be electric :). I hope to get the Tesla III. Did you hear that Safeway is getting rid of plastic and paper bags next year? How about Home Depot imposing control over products with nicotinoids? I digress. I have owned GE for 6 years now and am not selling any time soon. It is very entertaining to see how political views and global human believes affect people's investing style. Happy investing everybody!

Member Avatar TopAustrianFool (64.99) Submitted: 10/17/2014 10:57:11 AM
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"I do reside in the green state of California."

I wish you the best of luck in bankruptcy court. Remember, you want it this, so don't skedaddle out of the state when it gets bad.

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