There are far too many pundits devoted to the promotion of stagnant American companies. It all has to do with the old habit of elevating the not so stellar record of old school American corporate capitalism. GE’s troubles were far from over, but the message investors got was that this was a great buying opportunity. Yes, the stock looked like a bargain at $14, but it’s an even better bargain today at $9. This was about wishful thinking rather than facts because the evidence was there for all to see. Here is my post from two weeks ago.
One of the things that made the GE story so compelling was the prospect of restoring the company to its former glory. I wasn’t sold on the idea because it was never going to be a quick turnaround. But if GE does pull off a miraculous comeback, the new company is going to be radically different. I’m not so sure those who bought the stock in recent months understood what that entails given the panic selling we have witnessed this week.