Message Font: Serif | Sans-Serif
 
No. of Recommendations: 5
"Isn't this a vital business that Uncle Sam would protect, or no?"

A crucial part of being an investor is the ability to distinguish between the company and the stock.

Typically TMF asks you to focus more on the company's prospects.

I tend to agree with you that the government would not let GE go under. That would be a lot of lost jobs and, if I'm not mistaken, some defense contract work (it's been a long time since I've looked at GE in depth, mostly because -- like RHinCT -- I have better places for my money).

BUT... Bailing out the company is one thing and bailing out the shareholders is another. Mechanically, the U.S. could let GE go bankrupt (wiping out shareholders and putting bondholders in a position to take a meaningful haircut), but then assist the company in emerging from bankruptcy, perhaps taking a partial ownership stake.

GE needs to carefully manage its assets and its debt. Thinking you're not at risk as a shareholder is fallacy. Shareholders are the lowest man on the totem pole when it comes to corporate reorganization. I cannot say with certainty that is in GE's future, nor can I say it isn't. Just please realize that the government may bail out GE, if it comes to that. But they might not be so quick to bail YOU out.


Fool on!
Thanks and best wishes,
TMFDatabaseBob (no personal position in GE, although a family member is long GE)
Maintenance Coverage Fool
See what a "Coverage Fool" does here: http://www.fool.com/community/community-team.aspx
See my holdings here: http://my.fool.com/profile/TMFDatabasebob/info.aspx
Peace on Earth

Please note: I am not a member of any newsletter team. My opinions are my own and do not necessarily reflect those of the TMF advisers. I am not an investment professional, merely an investor.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.