What's The Big Deal About GE Earnings Report?
|
||||||||||
| Printer Friendly Story View |
Why was the market supposedly taken "off-guard" by the earnings report from General Electric yesterday?
The media has been full of news about the economy's slow down for months. You have weekly claims for unemployment up over 20% from a year ago, oil prices over $110 a barrel, consumer confidence in the toilet, a steady stream of financial firms taking huge write-downs of their subprime securities, and no credit to be found anywhere; so what is the surprise?
GE is considered by many to be a proxy for the general state of the economy. This is because it is the second largest corporation in the U.S. as measured by market capitalization, i.e. stock price x total number of shares outstanding (Exxon Mobile is larger), and its diversification.
GE is a diversified technology, media and financial services company. Its products and services range from aircraft engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and industrial products. It serves customers in more than 100 countries. So it is easy to understand how you could consider it a bed-rock of the U.S. economy.
However, with its stock price falling 4.7 points or 12.79% to 32.05 yesterday, it is just a little ahead of where it was 5 years ago. Yesterday was the largest one-day percentage decline for the stock in more than 20 years. It was the largest contributor to the Dow Jones Industrial Average's decline of 256.56 points to 12325.42 on Friday. But was this sell-off justified or was it just another knee-jerk reaction from investors that have become ever-more confused and trepid of the market's volatility?
If you have confidence a stock or mutual fund or the market in general will, at some point, resume its move upward, but you aren't sure when, you can employ a technique known as dollar cost averaging. This is a systematic strategy of periodic investing. It diminishes the inevitable risks involved with "timing" the stock market. Dollar averaging implies a consistent dollar amount invested at constant intervals, which may be monthly, quarterly or annually. It requires a fixed amount be invested at the chosen interval.
If the stock or index price goes up, a less number of shares are purchased. On the other hand if the price declines, a greater number of shares are purchased. This method of accumulation has proven to result in the overall cost being lower than it would have been if a constant number of - shares - were bought at set intervals.This is especially true with growth companies.
Some investors will interpret the GE hit as the worst being over. Others will brace for more down-side in the market to come as earnings are reported from other bellwether companies. In any event, be sure to keep your risk within your tolerance and keep ahead of inflation.
I invite your questions.
Or Contact Jerry Cole at:
509 Center Ave, Suite #102, Bay City, MI
(989) 892-5055
(The opinions expressed are solely those of the author and not Gen worth Financial Securities Corporation.)509 Center Ave, Suite #102, Bay City, MI
(989) 892-5055
| Printer Friendly Story View |
|
|
|
Jerry Cole - Retirement, Investment |
|
|
|
Printer-Friendly Story View
0200 Nd: 04-21-2024 d 4 cpr 0
12/31/2020 P3v3-0200-Ad.cfm
SPONSORED LINKS
12/31/2020 drop ads P3v3-0200-Ad.cfm