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Subject:  Re: Yesterday’s Damage? None to Bonds Date:  5/8/2010  4:59 PM
Author:  pauleckler Number:  30782 of 36218

GE has yet to have even a negative quarter in earnings.

Sadly, bruce, earnings are not an indicator of health in financial institutions. Money is fungible. The books that show earnings are kept separate from the value of the assets claimed on their books. So they can easily report earnings while having huge holes in their asset base. If forced to market to market, writing down worthless loan or mortage assets, they will take a major hit to earnings, and book value will similarly be reduced. Then the stock price will plummet.

In the world of finance, none of this is hard numbers. The numbers are soft and supported mostly by investor confidence in the future value of those assets.

I think it takes guts to hold these. But personally I have some of both of the ones that you mention. OK, with suitable returns, and as part of a diversified portfolio.
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