And the band wagon plays on! GE was booted out of the Dow today. This definitely means its price will go down with it now being out of the index.
Look, GE has lost its luster, but I wouldn't count GE out yet.
I lost my confidence in GE before Jeffrey Immelt dropped out. Although many will disagree, Jack Welch put them on a steady diet of steroids years back and you know what happens if you live too long on steroids. You feel on top of the world and then.....your balls shrivel up!
It will be interesting to see what happens going forward. If it does turn around, it is going to take a significant amount of time, but I wouldn't count them out yet.
I'm keeping my eye on GE as a long term project to watch (definitely no purchase at this time). Since everyone is now talking GE down, it looks like the perfect time to start my education on their businesses. But...they still have some falling to do.
With M&A hot to trot with the Wall Street boys right now, I could see the M&A boys trying to sell to Berkshire. Buffett knows how to guard against them since he spent time running Salomon years back, but there aren't too many companies with pockets as deep as Berkshire.
Berkshire might be able to use the locomotive business in their portfolio for capex to feed their BNSF arm. But, it would have to be cheap and represent a good value. Buffett is probably already pondering this now as he sits in his Kiewitt plaza office.
It goes to show you in these days of Private Equity and their proclivity for overleveraging, what can happen as a result of the excess use of financial tools. Toys are us. GE is us. GE was sunk by getting too far into the financing business.
Tisk, tisk.......GE should have known better. Many forget but there are always TWO sides of the leverage sword!
On guard!!
