GE is indeed looking questionable. Debt piled on debt, puffed up like a puff ball - that was New Zealand on steroids in the early to mid 1980s, going down the gurgler in a very big way in the 1987 implosion.
The very big difference now compared with then is that New Zealand was tiny compared with the rest of the world, whereas the rest of the world now has no externality on which to depend.
New Zealand could go right on producing agricultural products, tourism and some bits and pieces in the late 1980s and recover quite well [though all the puff ball entities went bust, along with all the shareholders' money]. But the whole world has no "outside world" on which to depend so it's a lot harder way out.
This is starting to look quite serious. So far, I'm still fairly well positioned with Zenbu growing fast, profits growing faster, Qualcomm growing quickly, profits growing fast, dividends just increased again, NZ$ going down the gurgler versus US$ as expected and more to go even as the US$ is trying to fall faster than NZ$ but can't.
A broker phoned me today saying "Why not grab some GE while it's a bargain?" I took a look at the graph [very long term one] and it looks ugly. The fall over the last couple of years has been getting steeper and there hasn't even been a preliminary dead cat bounce. It doesn't look like a bottom to me.
In terms of "rescues" I don't see why bond holders should be rescued, let alone shareholders. If GE goes belly up, the assets can be all knocked down and somebody will keep them in business with the debts all written off. Heck, I'd love to buy the assets if unencumbered.
Warren Buffett seems to have been premature in his "buying the bottom" of Wells Fargo, General Electric etc.
18 months turning to 18 days in 18 hours is financial relativity theory at non-Newtonian speeds. There must be an event horizon somewhere nearby.
Mqurice |
