Browse > Home / GE / GE Illustrates The Risk Of Being Long Right Now Pre-Earnings

GE Illustrates The Risk Of Being Long Right Now Pre-Earnings

April 11, 2008 6:35 PM

I have mentioned that I believed that most companies would either miss earnings and/or guide lower. GE set the tone of the first big chip to announce…and missed they did and got CRUSHED. CEO Immelt, who I have little confidence in, tried to dismiss it as a ”temporary” one time event because of the credit freeze related to the Bear Stearns meltdown. That would be great if it were true. The reality is, as I have been yelling for a year, if not longer, is that this problem is far, far deeper than people realize. This is a fundamental problem, not a recessionary problem. The incomes in the U.S. do not support the existing consumer debt levels. This is why we have a negative savings rate and have for some time. The problem was stalled because of a paper economy from the housing bubble - now it finally has come to roost.

I have mentioned several times to AVOID anything…and I mean anything - related to the U.S consumer. This is the beginning of the consumer weakness NOT the end. People that believe otherwise are dead wrong, and I have said it for months. I thought GE might give a false rally today as 40% of their business is international. Even that could not help them. If GE could take a 12% haircut while being 40% international, it does not speak well for the current valuations in the market. Earnings estimates are still FAR too high going forward and this market is NOT cheap, regardless of the nonsense being spouted.

Next week should get very interesting as the earnings season get’s in full swing. Be careful long on anything until earnings come out on that stock, IMO. The risk is far too high for an ugly number….

Written by · Filed Under GE 

Comments

One Response to “GE Illustrates The Risk Of Being Long Right Now Pre-Earnings”

  1. Scott on April 14th, 2008 1:20 am

    I picked up a few shares of GE when it hit 31.83. Lets hope GE gets their act together for next quarter.

Got something to say?