What Bernie Madoff and Jeff Immelt Have In Common

"How statistically different was Bernie Madoff's track record from General Electric's 100-quarter record of continual earnings growth ... Do we draw the line with ponzi schemes or do we do something about less clear-cut manipulations as well?"
-David Einhorn in the foreword to No One Would Listen
Jeff Immelt is now being investigated by the SEC because he told Hank Paulson in September 2008 that he was struggling to sell commercial paper. A few days later Jeff Immelt told investors that its corporate debt programs "remain robust". While GE is not a ponzi scheme they clearly have a very liberal definition of the word "truth".

GE Capital is a black box of which investors can only guess the contents. Basically, they have to trust management. Given the history of the company that is  a tough sell for me and I would only buy earnings at a discount. Yet, investors are once again paying nearly twenty times this years earnings for GE. While everyone likes to point the finger at someone else when they lose money, "it takes two to tango" and the American investing public never learns.

3 comments:

Onlooker said...

Opening TICK was very benign for the gap down open. I think this dip will be bought and we go back up to at least test the highs before maybe testing the 1200 mark at least. Then maybe that one is bought and we make another weaker rise to test the highs. Then MAYBE we'll be set up for a sizable drop to test 1150.

Onlooker said...

Down volume isn't really very high either. Especially on the Naz.

Onlooker said...

It looks like we need a bigger shake out first due to the sentiment. Gotta throw some fear into the herd for a bit.