how's it going today guys welcome back
to the channel hope you're having a
great day so far so in this video today
we're gonna be talking about GE general
electric stock as a lot of you guys know
that is my largest individual stock
position and we've seen a lot of
excitement and movement with this stock
so far in 2019 and as I'm sure you guys
know 2017 and 2018 were absolutely
terrible years for this battered and
beaten up stock here so just to go over
with you guys here a brief history of
what we've seen happen with general
electric stock in 2017 this was a $32
stock at the beginning of the year and
it fell down to 1750 per share being a
drop of 45 percent in 2017 then in 2018
it was even worse the stock went from
1750 a share down to 750 a share which
is a drop of 57 percent and now so far
in 2019 from the beginning to where we
are now the stock has gone from 750 a
share up to 1050 a share a rally of just
40 percent in the last six weeks so a
lot of people are scratching their heads
wondering what happened here to caused
this bull market here with GE stock why
is the stock all of a sudden
experiencing this rally and for those of
you who did decide to scoop it at the
six to seven dollar range you have a
really nice return here in a very short
period of time
so GE officially bottomed out at six
dollars and 66 cents per share and that
was in December of 2018 and then at that
point it started to go into an uptrend
and the main reason for that is the fact
that even though there was so much going
on within this company so much bad press
truly does become undervalued and the
mainstream investors began to realize
that and a lot of people began scooping
up shares because even though this stock
was just there was so much bad news
about it you could not ignore the fact
that that was a very low price
especially when you looked at the market
capitalization of what the market was
valuing this come
compared to their revenue for example it
was unbelievable how cheap this stock
really got but it was because there was
so much bad press and bad news within
this company and so from the bottom of
666 a share to where it is today that is
a rally of 58% so if anybody did end up
buying GE at the six to seven dollar
range I'd love to hear your comments
down below are you going to be holding
on to it for the long term are you just
gonna take your money and run let me
know what you guys are planning on doing
with general electric stock but as far
as my position goes with this company
I have 1045 shares of GE stock at a cost
basis of 1420 per share so I'm still
down quite a bit with General Electric
down 25% or $3,700 depending on how you
look at that but as I'm sure you guys
can imagine back when that stock was
like six or seven dollars a share I was
down massively on this position and so I
have no doubts about this company in the
long term I'm sure that I will have the
opportunity to sell at a break even or
at a profit if I wanted to in the near
term but I do consider this to be a long
term investment I'm gonna be holding on
to GE for I would say about five years
just to see how this pans out but I
definitely learned a lot of lessons from
this investment here in General Electric
that I want to share with you guys so
lesson number one that I learned and
that a lot of people learned with
General Electric is that dividends are
never guaranteed so as much as we'd like
to think that companies are going to
continue to pay dividends just because
they have previously we have to remember
that dividends at the end of the day are
not guaranteed and a lot of people
solely invested in General Electric
because for a while it was showing a
very high dividend yield of I believe
seven or eight percent so people saw
that and they said oh I can get an 8%
return here by investing in GE stock and
collecting my dividend and then Larry
Kolb came on the scene and absolutely
slaughtered that dividend down to one
penny per share but a lot of people
specifically bought General Electric
because of that dividend and then when
that dividend was slashed to one penny
per share they're like why the hell do I
own this stock at the end of the
day so never invest in the companies
solely because of that dividend yield
I've said this time and time again
dividends are never guaranteed they can
be restructured cut or cancelled at any
time as we saw here with General
Electric where they are virtually barely
a dividend payers because financially it
does not make sense for them to continue
paying that dividend with the the cash
management problems that they are having
the second key lesson I learned from
investing in GE stock is this lesson of
patience you should be very patient when
you begin entering any kind of position
and these days as well I mean I can
understand when we were paying
Commission to be trading stocks that you
know you wouldn't want to follow a
strategy of averaging down or easing
into a position but these days there's
really absolutely no excuse why you
would dump all of your money into a
stock at one particular time the
strategy I follow now is to take a small
initial position in a stock maybe 20 to
30 percent of how much I truly want to
own of that stock and then I pretty much
use that as a way to tell what is the
price doing it that continues to fall I
will begin to accumulate more and more
shares very similar to what I did with
JD I started buying JD I believe at 32 a
share and then I accumulated more shares
at $20 or so twenty to twenty one
dollars and so even then $32 was uh it
was obviously had a lot more to fall
falling all the way to 20 so patience at
the end of the day is the most important
skill you can master as a long-term
stock market investor so if for example
you wanted to have a $5,000 position in
a company like General Electric or any
company out there I would start off
personally with you know maybe one to
two thousand dollars invested and then
take a couple more bites out of that
stock as you can see what that price is
doing if you just dump all of that
$5,000 into that stock at one point in
time and then the price falls
drastically like it has for me with
General Electric and JD comm you've at
that point removed the opportunity to
average down and lower your cost basis
unless you want to acquire more shares
but at that point that stock is going to
carry more weight in your
then you had originally planned for so
that is my recommendation is to average
down and you know take a small initial
position but whatever strategy works for
you guys at the end of the day is what
you're going to follow and then the
third and final thing that I learned
here and that a lot of people have
learned with GE is that market sentiment
or the overall feeling of investors can
literally change overnight
I mean we saw this going from being one
of the most hated stocks on Wall Street
next to maybe like snapchat for example
to all the sudden experiencing a 50 plus
percent rally in six weeks and so timing
the market and getting in at the exact
perfect time it's going to be an
impossible task you might get lucky once
in a while and buy clothes or near the
bottom but trying to buy stocks at the
bottom is definitely not a strategy that
I personally follow so it may be
something you try to do and maybe using
something like technical analysis you're
able to get a better idea but personally
you know I like to know that I own
shares at that price and once it's below
a certain price range that I'm
comfortable with I have no problem
accumulating shares at that price
because I believe that company will be
you know worth more in the future all
right so now we're gonna get into a
couple of reasons why we've seen this
bull market taking place here with
General Electric stock but before we get
into that I just wanted to mention that
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that $500 Amazon gift card but anyways
let's go ahead and get into it now
and talk about why we are seeing General
Electric in this bull market first of
all one of the main reasons that was an
early catalyst for this rally in about
December is the fact that we got wind
that the GE Healthcare spin-off is still
on track for the middle of 2019
basically when Larry Colt became CEO
there was questions of whether or not
they were still going to be spinning off
the healthcare business and that was
something that I think most investors
were supportive of is separating that
business off and actually having it be
its own publicly traded company but then
people were wondering is that still
going to happen under the new CEO and we
know that they have officially filed for
that IPO and that spin-off of the
healthcare company and so that is
expected to take place in the middle of
2019 and so this is going to be
interesting for GE shareholders because
at a certain point I believe they will
set a record date and if you are on the
books as a shareholder on or past that
date you're going to get shares of this
new GE healthcare company once they have
their IPO so basically they are taking
the GE healthcare business and spinning
it off into its own company and issuing
shares to GE investors people who
already own General Electric stock so
you are now going to have you know two
stocks two different General Electric
stocks after that spin-off takes place
and the reason why they said they're
doing this is this is going to allow
General Electric to focus on their core
industrial and energy business which
makes sense and it also is going to be
allowing GE health care to be more
flexible and innovative because they're
not being bogged down by these other
businesses that GE is involved with that
are not necessarily doing too well GE
Healthcare is arguably their best run
business and so it makes
for that to be a standalone business so
personally as a shareholder I think
that's kind of exciting news here that
we're going to be getting you know stock
of GE health care and that that company
is going to be a standalone company and
so we should be expecting to see that
taking place sometime in the middle of
2019 so the confirmation that that is
still underway and still in the works
was definitely a bullish catalyst for
this stock number two the second big
piece of news here is there was some
restructuring of this merger with Webb
tech corporation and that is the
Westinghouse air brake technology
corporation it is a passenger rail
transportation company and this is one
of the businesses that General Electric
is selling off to generate cash they're
selling off their GE transportation
business and so they are going to be
merging the transportation business with
Webb tech corporation on February 25th
and General Electric shareholders are
actually going to be getting issued
shares of lab tech stock on February
14th is the official date so on
Valentine's Day you'll log into your
brokerage account and you'll have a
little Valentine's Day gift there from
General Electric I believe from what I
read you should expect at the current
market value of lab tech to get about 40
cents per share of GE that you own in
Webb tech stock so me personally that'll
be about $400 worth of lab tech stock
based on what they are doing there so
General Electric is basically selling
their transportation business to Webb
tech corporation in exchange for shares
of lab tech and then immediately after
that they're going to sell that off to
generate cash and this is going to allow
them to generate about 3.4 billion
dollars in cash and so earlier on this
plan was for them to generate I believe
about 2.9 billion dollars of cash and it
would have given current DGE
shareholders a larger stake in Webb tech
but they actually restructured that deal
Larry Culp restructured that deal so
that now
General Electric shareholders are going
to get slightly less lab tech stock but
they're GE themselves is going to be
able to generate more cash from the deal
and overall I think investors understand
that's the best possible option here
because General Electric needs the cash
this point in time and as much as we
want that little incentive there with a
couple shares of lab tech we would
rather care about the health of the core
investment here which is General
Electric and then the third reason why
General Electric stock is in an uptrend
here is because we had the quarter for
earnings report come out and there was
no more bad news within that earnings
report pretty much every report we've
seen over the last year or two every
single earnings report there was more
and more bad news being stacked up and
this is the first report we're pretty
much it was exactly what was expected
here we saw a cash flow is sufficient
with them so there is no credit concerns
they are selling off you know as we said
transportation as well as Baker Hughes
and they're doing the healthcare
spin-off which is going to allow them to
generate you know a large amount of cash
we heard some positive commentary from
analysts and a lot of people are very
trusting and supportive of Larry Culp as
the new CEO of this company and so
basically because there was no more bad
news in that quarter for orange report
we saw a massive jump in that stock I
believe it was up about twelve to
fifteen percent on the day of that
earnings report simply because there was
no more bad news that came out about
General Electric so we are hoping that
the worst is behind us there's some
interesting drastic moves being taking
place here with these spin-offs and the
selling off of these businesses and we
certainly hope this is going to be
enough to help GE in the long run and
return to a well-run business that's
generating you know healthy amounts of
cash flow and then eventually being able
to pay a dividend that's in line with
other industrial companies out there so
just how much cash was General Electric
able to free up well between the
transportation merger with lab tech the
Baker Hughes sell-off that they have
planned and that I believe is going to
be for July of 2019 is one that's going
to go through and the healthcare
spin-off in mid-2000 19 that's going to
allow them to generate about thirty
billion dollars in cash and also by
reducing that dividend to one penny per
share that is saving them about four
billion dollars per year so any concerns
are about you know cash or this company
possibly going under or going bankrupt
those concerns are pretty much all
subdued at this point because of the
amount
cash that they're going to be generating
and the other big piece of news that
came out in this quarter is that they
finally settled the investigation into
their subprime mortgage business which
was the Weyerhaeuser mortgage company
WMC which was owned by General Electric
this was the fifth largest subprime
mortgage lender in 2006 if you guys are
not familiar with that check out the
movie The Big Short on Netflix it talks
a lot about the subprime mortgages which
was a major catalyst for the 2008 stock
market crash and the housing market
crash and so once the subprime market
collapsed WMC closed their doors in 2007
and obviously there was a lot of shady
stuff going on behind the scenes so
General Electric finally agreed to pay a
one-time settlement of 1.5 billion
dollars obviously a massive sum of money
but that's going to allow them to put
that to rest and not have to worry about
that hanging over their heads anymore
so having certainty on that issue was
also a positive for this quarter but
anyways guys that's gonna wrap up this
video that is an update here on General
Electric stock what's been going on with
this company and why we have seen this
insane rally taking place here in the
last couple of weeks so let me know in
the comments section what you guys think
about GE have you bought shares this
company are you still saying you know
you wouldn't touch it with a ten-foot
pole I would love to hear what you guys
think but thank you guys so much for
watching this video I hope you enjoyed
it and I will see you in the next one
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