Back in April, I announced that I bought some shares of General Electric (NYSE: GE) for a trade. How has my trade been going? Pretty lousy.
I was amazed when I read a recent article by Melly Alazraki. She discussed GE's recent accomplishment (if you can call it an accomplishment) of hitting a price level not seen since May 2004. That price was $30.39. Yesterday, the intra-day low was $30.21, which was also the new 52-week low. What was the price I paid when I began my trading position? $32.09. As can be seen, I'm losing money on paper at the moment. Of course, when I bought GE at that price, I was not necessarily looking to be out of the stock the next day. I realized that it might be a few months, maybe more, before it rebounded back to perhaps $37 or $38 per share. So, my definition of trading in this case might be a little different than that of the typical trader.
However, I have to admit that, in the back of my mind, I thought the stock would have been higher by at least a couple bucks at this point. Why? Well, the dividend yield seemed too attractive to me. I mean, even now, isn't it slightly crazy that GE is yielding over 4%? How long will Wall Street allow it to exist at this level?
I see little downside from here, only because I think GE at a 4.5% yield would be very surprising (imagine 5%!). Like I said the last time, I own long-term GE shares as well as shorter-term ones. I like the company's prospects and will probably always hold shares in my portfolio. But, if I can catch a little bit of trading action considering how much the stock is yielding, I figure I might as well try. And, for all investors out there, you better at least set a little time aside for some research on this classic blue-chip component of the Dow Jones Industrial Average. GE is currently down on its luck, but I'm betting it's temporary...
Disclosure: I own shares of GE, both for the long term and short term; positions can change at any time.
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Reader Comments (Page 1 of 1)
5-28-2008 @ 10:40AM
Bob Baldwin said...
If you want to bet on Jeff Immelt, go right ahead. Unfortunately, I'm stuck because I still have so much Jack Welch profit that I'd have to pay Uncle Sam obscene amounts if I got out. Unfortunatly, I have to agree with O'Reilly on this one.
5-28-2008 @ 10:53AM
Bruce E Warnock said...
We are retired folks and GE is our main investment. Alas, we look back to the year 2000 and GE at $60 under Jack Welch. What a long way down under Jeff Immelt.
Nothing will change until GE separates the positions of CEO and Chairman of the Board, so at least Immelt would have a "boss" to answer to. Look at all the fuss at XOM today on the same issue. This appears to be a big ego item for these executives.
GE will rebound for sure, but they can do so much better.
5-28-2008 @ 11:08AM
Dan Barnett said...
When GE missed earnings & dropped 5 bucks in a day, I figured it was "down on its' luck" & got in at 32.25. Now GE is downer on its' luck.
There is alot of talk about break-up & split-offs but the stock still slowly sinks. I'm not jumping yet, the dividends are attractive, but I am feeling lonely.
5-28-2008 @ 11:46AM
tom keyes said...
GE is simply following the financials, since it is in part a financial. they are constantly talking about 'getting back to the core business' and i really wish they would. however the announcement that they are selling their appliance business seems to be another move in the wrong direction.
5-28-2008 @ 6:16PM
Dave Chart said...
I am with Bill O'Reilly. I stopped buying GE products and I sold my GE shares. So long as GE continues selling to terrorists who want to kill us then they do not deserve my business.
By the way, I was at Home Depot the other day and their hot water tanks were all the GE brand. Since I was not given a choice by Home Depot (I did not go to purchase a hot water tank - I just happened to walk through that aisle) I turned around and walked away from Home Depot.
So now, businesses that carry GE product might be paying the price for GE's stupidity.
5-29-2008 @ 5:46PM
Tattletale said...
Putting it simply.....as far as being a good ole USA principled company...GE sucks.
5-30-2008 @ 8:56AM
Sheldon L said...
Because of its size and business units GE is simply tracking the sluggish economy and CEO George Bush. Immelts popularity like Bush's seems to be most popular with insiders (board vs cabinet) and one day someone from GE will publish a tell all book.