By: Scott Davis
It’s been since April 2008 that we’ve seen GE in a negative vortex like this. Banks had their “fun” in 2008-2009 and no price was too low. The 2001-2002 Tech Bubble burst was similar (GE stock dropped by half), though worse still for tech. In both cases, a bad recession, panic destocking, and collapsing credit markets defined each of those periods for industrials overall and GE specifically. None of those conditions exist for GE today, making the panic sell-off even harder to comprehend. This note looks at history and defines a path out of this mess. To be clear we would buy the stock today. Granted we said that before and have been terribly wrong, but we stand by the call at an even lower entry point.