General Electric (GE): Important Lessons on Valuation
A regular viewer of our FAST Graphs channel has asked me to review General Electric (GE) on several occasions. His real question is could FAST Graphs have alerted us to the forthcoming pending problems that General Electric suffered back in 2001 or 2003? The answer is straightforward and would apply to investing in any company. There is no substitute for comprehensive research and due diligence, and more importantly, for continuous monitoring of your portfolio holdings.
Analyze Don’t React
By continuous monitoring, I am not referring to reacting to every wiggle in the price. Instead, I am talking about watching the company’s fundamental operating results very closely. This is primarily accomplished by reading the companies 10K’s and 10-Q’s as they are released. However, it’s also important to pay attention to any major press releases or significant news that might be going on with the company, its industry or its competitors.
Furthermore, I want to be clear that I am not suggesting that investors react to every bit of noise that often shows up. Instead, I am suggesting careful and thoughtful analysis. In other words, don’t react, keep your emotions under control and thoughtfully analyze each situation. What you should be trying to do is determine whether a given situation is a permanent or potentially significantly disruptive occurrence or is it simply a temporary interruption that will not impact the company long-term. Finally, recognize that this cannot be accomplished with perfect insight. On the other hand, careful analysis can help you avoid the most egregious long-term fundamental deteriorations.
FAST Graphs Analyze Out Loud on General Electric: