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Time to short GE


AbDXB1345

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Hi All,

Havent seen any chatter on the GE mystery, keen to get peoples views on this?

My 2 cents = the accuser has a huge problem  if the allegations of fraud are incorrect, potentially for both market manipulation and for defamation, never mind the legal case GE would take out against his firm. He has also gone to the police with some "evidence", if found to be false he could also be in trouble for filing a false police report.

Granted the guy has some skin in the game with a hedge fund, but you have to ask yourself whether the risk reward would justify him from taking such a huge risk.

Also wondering why Ge haven't got their lawyers onto him and public stated that they are proceeding with a legal case against him...

I say short the stock as where there is smoke their is fire, and at the least GE will have to go through some extended period of uncertainty and LONGS/value investor would rather have their money in a stock that is less uncertain.

Cheers

 

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Interesting item for me this @AbDXB1345.  I do some training at the institute of chartered accountants and use historic market/economic shocks as a backdrop for what Finance and Accounting departments need to be doing to be prepared for the future.  Long story short I have been talking about what the next big shock will be and what the impacts would be (i.e. a signal of the next big economic and market shock).  If this is real then it would certainly qualify, although I would never have guessed that it would come from such a venerable company as GE.  While many commentators have been talking about global macro economic and political events no one has been talking about the next big corporate scandal (although I think in retrospect we will hear a lot about share buy backs as having been a huge hidden Ponzi!).  It is a truism that no one sees a Black Swan before it happens, maybe then this is it.

However I see this as potentially a signal of the end of the Bull (look at what happened when Enron/WorldCom fell - it is not surprising to me that this coincided with the 2000 stocks collapse).  In terms of the stock itself, it peaked in 2000 at circa $50 (I mean it never recovered from the first tech boom!) and has been in a dramatic decline ever since and now it is trading at $8.70.  If the accusation proves true GE fails and gets asset stripped (can you imagine!  GE?).  So the target could be zero but what happens to a trade if the company fails?  Does it pay out?  If this is played out in the media there could be a lot of whip saw price action as the PR and legal battle commences so I wouldn't be too keen on becoming embroiled in this myself TBH.  Definitely worth following though so thanks for raising it.

 

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Of the specific event @AbDXB1345 maybe counter parties with exposure to GE, whether the insurance companies referenced by Markopolos or suppliers to GE, especially any with a significant portion of their business with GE.  As GE has been a poor performer for decades it is not likely to be a huge impacting factor for investors as Enron was in 2000, given that Enron was riding high.  For me it is more about a signal of a wider problem within the economic data being reported.  It is rarely just one organisation that is hiding things, typically this is tip of the iceberg stuff and the contagion risk is that it spreads to the wider market and that will be enough to trigger a collapse event and a resulting recession or worse. 

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2 hours ago, AbDXB1345 said:

Granted the guy has some skin in the game with a hedge fund, but you have to ask yourself whether the risk reward would justify him from taking such a huge risk.

 

 

 

Maybe he's already in deep trouble and this is his 'hail Mary'.

It's a bad idea to trust anyone in the financial world ...

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@dmedin It is looking good and I still feel like GE haven't taken enough steps to deal with the allegations i.e. send their lawyers after the accuser.

There seems to be a lot of directors of GE going on air trying to convince investors that all is OK, but the investors seem to be becoming more and more concerned. The CEOs purchase of shares gave it a slight sugar rush but that seems to be wearing off.

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  • 2 weeks later...

Yep the downtrend was near the end, now it is just going up and up.  Maybe it is priming the pump but 'now' is most definitely not the time to short GE.  In fact - I am inclined to never short big U.S. companies like Boeing or GE because they are so heavily manipulated by the big Yankee sharks that you are going to get eaten alive no matter which way you bet on them.

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  • 2 weeks later...
22 minutes ago, dmedin said:

Wrong again,

I can sort of see what you were trying to do, short the pullback failure but the entry should have been either up around 915 or wait until the prior low at 890 was taken out but not at 900 just as price was about to arrive at the 'First Trouble Area' (the low at 890), in fact almost anywhere but there.

image.thumb.png.e4717152addbff7b2d7986906b282bf5.png

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