GE Message Board

 

Mark Mitchell
02/21/09.8:39.PM

Media Coverage Charles Gasparino, the CNBC reporter,...

586

 

Scott Larsen
02/16/09.5:25.PM

Market Makers It was obvious that when GE needed to...

114

 

Mahyar Hashemi
02/15/09.12:39.PM

Market Makers I think if you actually watch him spe...

100

 

Perry Rod
02/13/09.3:26.PM

Market Makers In December, I did a quick Christ...

1038

 

Perry Rod
12/24/08.7:42.PM

Analysis Lets do a quick overview of General E...

289

General Electric Co. Media Oversight

 

Jim Cramer
DNDN GE TSCM

Moderated By
Mahyar Hashemi

 

Charles Gasparino
GE

Moderated By
Market Rap

General Electric Co. Market Maker Oversight

 

Warren Buffett
GE DOW

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Market Rap

General Electric Co. Executive Oversight

 

Jeffrey Immelt
GE

Moderated By
Market Rap

General Electric Co. Featured Analysis

 

General Electric, and the Crumbling Myth of Warren Buffett

by Perry Rod, Published: February 13th, 2009 3:33 PM CST

In December, I did a quick Christmas valuation analysis of General Electric and concluded that $16 was too much to pay for the company, given the current market environment and the company's enterprise multiple.

Since then, GE (GE) has given up tens of billions in market capitalization and just recently bounced off a low of $10.66, a price that has not been seen in over a decade.

Meanwhile, the investment legend Warren Buffett was caught buying into GE when it was trading in the mid 20's.  Of course, when Buffett buys stock he gets extra special incentives.  He received an option to buy 3 billion GE at $22.25 in the next five years and also receives a 10% dividend (callable within three years).  Investors who followed him in, of course, have gotten a rude awakening - and no special incentives.

Warren Buffett has taken a hit, but it is just no comparison to the short term slaughtering of common investors or even hedge funds who mistakenly believed in Warren Buffett's extraordinary leadership position in the stock market.

It's important to note the difference between us and a person like Warren Buffett when it comes to the stock market.  For Warren Buffett, making a billion or losing a billion is meaningless for his day to day life.  A billionaire does not need any more money.  And a billionaire can lose a tremendous amount of money, but is highly unlikely to ever become desperate or in a survival mode.

It may be time for the myth that is Warren Buffett to be shaken.  Buffett’s father was, of course, a Congressman and stock broker.  Little Warren did not grow…

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