Reuters has floated an interesting theory based on conversations with institutional investors. GE’s stock, which is down since Jack Welch left and flat this year, might go up if the economy goes south.
It is a fiendish, diabolical and perverse view of the markets. But, it may be true.
In an economy heading south, small companies suffer and investors row the life boats for safety. Goldman Sachs even supports the thinking: "In a moderating growth operating environment," Dray wrote, " … we believe investors will gravitate to GE’s late-cycle exposure, high-margin services mix, emerging markets strength and attractive earnings visibility/consistency."
Reuters admits that a spin-off of the entertainment division NBC Univeral might help. The unit has been a dog.
GE shareholders can hope that their shares will rise when the economy collapses and they are out of work and unable to sell their homes.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
Top Gaining Stocks
Top Losing Stocks