Know This About General Electric Stock

1931-1934. 1966-1968. 1973-1974. 1986. 2008-2009. In each of those years, the price of General Electric stock declined by at least 15% greater than the stock market as a whole. This is despite the fact that General Electric was a superior company that outperformed the Dow Jones by three percentage points annually since 1933, 3.5 points annually since 1967, 2.25 points annually since 1973, one percentage point since 1986, and has underperformed the S&P 500 by a percentage point annually since 2009. The 1986 and 2009 valuation periods will eventually become more attractive once GE executes its strategy of selling financial service operations and receives a higher P/E ratio upon becoming a pure play industrial investment.

During every period except 2008-2009, the short-term underperformance of General Electric was due to temporary declines in the demand for industrial equipment that made General Electric’s profits fall further than that of the typical Dow … Read the rest of this article!

A Primer On Terrible Investing

About this time last year, GT Advanced Technologies announced its surprise bankruptcy filing. The company was known for its enthusiastic shareholders that had the zeal of the St. Louis Cardinals fan base, and stood to make shareholders a lot of money by manufacturing the sapphire glass that would be used in iPhones and Apple watches across the world. When GT Advanced missed a production deadline, Apple switched suppliers and simultaneously demanded debt payments from GT Advanced. The sapphire glass manufacturer created the Bill Buckner mistake of going deep into debt against the company that also had full control of its earnings.

In the aftermath of the bankruptcy, I received quite a few e-mails from readers asking what kind of elements can signal a threat to a potential investment before the benefit of hindsight kicks in.

Aside from valuation concerns, a bad investment occurs when: (1) a company has bad management, … Read the rest of this article!

Yahoo’s History And The Alibaba Arbitrage Opportunity

Yahoo (YHOO) is one of the most criticized technology companies in the world. It is frequently seen as a step behind Apple and Google, and the haphazard growth in advertising dollars across its journalistic platforms (coupled with a non-intuitive interface) make the company an easy target for ridicule on the CNBC circuit.

While I agree that Yahoo is not a company I would put on my list of “100 Companies To Buy And Then Take A 50 Year Nap”, there are nevertheless many peripheral factors that make Yahoo far more intriguing than a superficial glance at the commentary or the news site would reveal.

David Filo and Jerry Yang hung out at student centers, bars, and coffee shops in the early 1990s while graduate students at Stanford, trying to figure out a way to get news stories and word searches to people across the United States in a more convenient … Read the rest of this article!

Tesla Investors Await A Rude Awakening

When I read investment message boards, I can tell that investors are about to make bad investment decisions when they abandon traditional measurements of value and instead suspend disbelief by focusing on esoteric business metric. This is nothing especially out of the ordinary–there are always areas of the economy vulnerable to either excessive greed or excessive fear that temporarily persuade intelligent, hard-working men to depart with their money on a whim.

Those thoughts come to my mind when I read articles touting investments in Tesla Motors. There are many things to like about Tesla the company. The Roadster and Model S recapture some of that sexiness in American car design by harking back to the era when Americans actually based part of their identity on the cars they drove.

It is impressive that Tesla has been able to commercially produce an EPA-compliant electric vehicle that can travel 236 miles on … Read the rest of this article!

Six Business Lessons From Ebby Halliday

Three days ago, Ebby Halliday died in her sleep at the tender age of 104. With her fame largely limited to the Dallas area, Halliday succeeded in growing a real estate company that she founded by herself–generating $2,500 in first month sales in 1945–into a regional empire that employed 1,700 people and generated $6.5 billion in annual sales. I found some great snippets of her life that can give you a picture of what she meant to the Texas business community.

When a customer or acquaintance would inquire “Does so-and-so work for you?”, Halliday would nod her head affirmatively while gently correcting to say, “Yes, she works with me.”

We’ve all seen the corporate trend towards referring to the employees as “family” or other endearing terms. This move often backfires–or at least rings hollow–as the employer actions fall short of the expectations created by the affectionate terminology.

But Halliday was … Read the rest of this article!