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A lot has changed for GE removed. The stock has dropped 75% in the last 2 years, the quarterly dividend was cut from 24 cents in 2017 to 1 cent, and the pension fund is underfunded by $ 31 billion. (AP Photo / John Minchillo, File)
Many General Electric (GE) retirees depend on the company for their pension and the stock for their portfolio. This works is great, but the flip side is not pretty. Judging from the response to General Electric Retirees Take Another Beating, Many Overseas Holding in GE Stock, which is down 75% in the last two years, but will not be out of any kind of loyalty to the company. If you are in this camp, your best chances of making a hard decision.
Loyalty
GE retirees have long been envied by others for their generation for 3 reasons.
First, your life is made GE an iconic American success story. Who would not be proud of that?
Second, many GE employees had been awarded enough to be wealthy. Many never have a single share of GE stock and lived comfortably on the dividends.
Third, GE's pension plan is a feature of the market. Just about everyone else has a defined contribution plan, in which the benefits ultimately depend on how much you choose to turn over.
In addition, GE has made voluntarily made special one-time pension payments. For GE withdraws these payments are like getting a 13th monthly payment payment instead of the normal 12. Between 1980 and 2011, GE did this not once, but nine times.
General Electric Gave you a lot of money, and you've got enough of it to pay off. GE has had your back for decades, and now you want to have their back. I understand where your loyalty comes from.
What's Changed
In short, General Electric is in trouble. That's why the stock has dropped 75% in the last 2 years, why the company has cut its quarterly dividend from 24 cents in 2017 to a 1 cent token, and why the pension fund is underfunded by $ 31 billion.
What Can You Do?
The key decision can you control your stock?
The underfunded pension fund may worry you, but there is nothing you can do about it. In the worst case scenario, the Pension Benefit Guarantee Corp. (PBGC), a government agency, will take over GE's pension obligations. Check out this page to see what you can maximize your PBGC steps in.
Your main reason to be able to save your money at the same time do not recover from it.
reactions
I have suggested that they withdraw from their stock, and have two common reactions. Here's one:
Similar arguments were made about Apple when its stock crashed into the single digits. Then, it became the most valuable company, eventually becoming the first company at $ 1 Trillion.
Imagine if the stock price was $ 10 per share. That seller would be mighty disappointed. It is easy to sell when things are bleak; fortunes are made, however, when one can look beyond today and see the possibilities of tomorrow.
Here is my reply:
If you think GE is like Apple 10 years ago, make it a reasonable bet in a diversified portfolio – 5% maybe 10%.
The second common reaction is what I call the 'thought experiment'. Here it is:
If they were to be sold out each other than Healthcare and Aviation, they would be worth about 19-20 bucks per share. The conglomerate is unhealthy but with very valuable parts. GE is not a $ 9 stock in a rational world.
My reply:
Your thought experiment might make more sense Flannery presented earlier this year. However this is not GE's plan. Warren Buffett might be able to adopt this plan, but we will not. If you believe this analysis, make it a reasonable size bet in a diversified portfolio – 5% maybe 10%.
I have heard many creative variations in my portfolio.
A Better Question
GE is undervalued. A better question is how much of your portfolio should you have in GE?
Even the best investors only make money 66% of the stocks they buy. They are careful to manage the size of their positions so that the winners.
No one should bet so much that they are wrong, they could never recover. This goes double for those who depend on GE's pension plan.
If GE is already more than 10% of your portfolio, if you believe is the company is unlikely to have the potential to be the next Apple.
Maintaining a 10% position in GE is a tremendous vote of confidence in the company that you can more comfortably make if the rest of your portfolio is in other stocks.
Size Matters
Just about everyone I've gotten to meet you. However, I have yet to hear from anyone.
I think it is because it is so much more than 10% of their portfolios so much to get a big decision. If GE is 60% of your portfolio and you want it to be 10%, you have to sell 50% of your portfolio. That's a lot more than a race correction.
For those who are in this boat, I suggest you do not place it just one big sell order. Instead, place your order in GE Holdings and plan it down to 10%.
It turns out to be a lot of small steps in the right direction.
Each time you sell some stock, you'll have some cash to invest. If you are interested in any of the stocks I am following, when I write about them.
This article is part of a series of articles for their portfolios back on track. To be notified when the next installment is published, click here.
If you want to tell me what you think, click here.
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A lot has changed for GE removed. The stock has dropped 75% in the last 2 years, the quarterly dividend was cut from 24 cents in 2017 to 1 cent, and the pension fund is underfunded by $ 31 billion. (AP Photo / John Minchillo, File)
Many General Electric (GE) retirees depend on the company for their pension and the stock for their portfolio. This works is great, but the flip side is not pretty. Judging from the response to General Electric Retirees Take Another Beating, Many Overseas Holding in GE Stock, which is down 75% in the last two years, but will not be out of any kind of loyalty to the company. If you are in this camp, your best chances of making a hard decision.
Loyalty
GE retirees have long been envied by others for their generation for 3 reasons.
First, your life is made GE an iconic American success story. Who would not be proud of that?
Second, many GE employees had been awarded enough to be wealthy. Many never have a single share of GE stock and lived comfortably on the dividends.
Third, GE's pension plan is a feature of the market. Just about everyone else has a defined contribution plan, in which the benefits ultimately depend on how much you choose to turn over.
In addition, GE has made voluntarily made special one-time pension payments. For GE withdraws these payments are like getting a 13th monthly payment payment instead of the normal 12. Between 1980 and 2011, GE did this not once, but nine times.
General Electric Gave you a lot of money, and you've got enough of it to pay off. GE has had your back for decades, and now you want to have their back. I understand where your loyalty comes from.
What's Changed
In short, General Electric is in trouble. That's why the stock has dropped 75% in the last 2 years, why the company has cut its quarterly dividend from 24 cents in 2017 to a 1 cent token, and why the pension fund is underfunded by $ 31 billion.
What Can You Do?
The key decision can you control your stock?
The underfunded pension fund may worry you, but there is nothing you can do about it. In the worst case scenario, the Pension Benefit Guarantee Corp. (PBGC), a government agency, will take over GE's pension obligations. Check out this page to see what you can maximize your PBGC steps in.
Your main reason to be able to save your money at the same time do not recover from it.
reactions
I have suggested that they withdraw from their stock, and have two common reactions. Here's one:
Similar arguments were made about Apple when its stock crashed into the single digits. Then, it became the most valuable company, eventually becoming the first company at $ 1 Trillion.
Imagine if the stock price was $ 10 per share. That seller would be mighty disappointed. It is easy to sell when things are bleak; fortunes are made, however, when one can look beyond today and see the possibilities of tomorrow.
Here is my reply:
If you think GE is like Apple 10 years ago, make it a reasonable bet in a diversified portfolio – 5% maybe 10%.
The second common reaction is what I call the 'thought experiment'. Here it is:
If they were to be sold out each other than Healthcare and Aviation, they would be worth about 19-20 bucks per share. The conglomerate is unhealthy but with very valuable parts. GE is not a $ 9 stock in a rational world.
My reply:
Your thought experiment might make more sense Flannery presented earlier this year. However this is not GE's plan. Warren Buffett might be able to adopt this plan, but we will not. If you believe this analysis, make it a reasonable size bet in a diversified portfolio – 5% maybe 10%.
I have heard many creative variations in my portfolio.
A Better Question
GE is undervalued. A better question is how much of your portfolio should you have in GE?
Even the best investors only make money 66% of the stocks they buy. They are careful to manage the size of their positions so that the winners.
No one should bet so much that they are wrong, they could never recover. This goes double for those who depend on GE's pension plan.
If GE is already more than 10% of your portfolio, if you believe is the company is unlikely to have the potential to be the next Apple.
Maintaining a 10% position in GE is a tremendous vote of confidence in the company that you can more comfortably make if the rest of your portfolio is in other stocks.
Size Matters
Just about everyone I've gotten to meet you. However, I have yet to hear from anyone.
I think it is because it is so much more than 10% of their portfolios so much to get a big decision. If GE is 60% of your portfolio and you want it to be 10%, you have to sell 50% of your portfolio. That's a lot more than a race correction.
For those who are in this boat, I suggest you do not place it just one big sell order. Instead, place your order in GE Holdings and plan it down to 10%.
It turns out to be a lot of small steps in the right direction.
Each time you sell some stock, you'll have some cash to invest. If you are interested in any of the stocks I am following, when I write about them.
This article is part of a series of articles for their portfolios back on track. To be notified when the next installment is published, click here.
If you want to tell me what you think, click here.
