General Electric To Sell Most of GE Capital

Yesterday was a classic example of why I do not spend anytime whatsoever discussing market timing, defined as the purchase or sale of stocks based on expected short-term price swings rather than conclusions formed by studying the business itself. At the time I am writing this, General Electric—a staple in pensions, trust funds, 529 educating plans, 401(k)’s, IRAs, and taxable accounts around the world—is up over 10.8% on the day, which is a heck of a jump for a company that is valued in the $250 billion range.

The cause for investor elation is the news that General Electric will be selling off all of its financing divisions under GE Capital except the aviation, healthcare, and energy lending divisions because: (1) those divisions are directly tied to General Electric in that a robust commercial lending platform allows other companies to buy GE’s products, (2) the debt owed to GE will … Read the rest of this article!