Why I'm Finally Buying Shares of General Electric


              Unless you have been living under a rock for the last two years- you probably heard that one of the largest, and most powerful companies in the world has fallen over 60% in a two year span. It hit a low of $6.45 per share. Which is at the point i thought to myself " this might be a pretty good buy ". I watched it for a while and finally pulled the trigger at about $7.38. I have been buying on dips and selling on highs for about three months now, over all- i am bullish long term. But like to secure profits early.


              But why did it fall so hard so fast? Well their first issue was being massively over leveraged. In 2015 they had over 389 billion dollars in debt and just 25 billion in gross income. But luckily for them, they had been paying a $.24 quarterly dividend- which was yielding over 3%. They had the option to cut the dividend- which they did. And that dramatically helped their debt problem, in 2015 they paid over 9.2 billion dollars worth of dividends, in 2018 they just under 4.5 billion. But they still aren't out of the woods yet- they are still underwater a bit. But moving in the right direction. They have more than doubled their cash and cash equivalents since 2015.

               That's not the only reason, they have had declining free cash flow, which is just basically a measure of how much cash a business has after accounting for capital expenditures. Which lead former CEO Jeff Imlet to cut forecasts for 2018- and it got even worse the farther they cut the dividend and they got hit harder after they missed their estimates. But finally- the market is expecting the new free cash flow to increase in 2019 and 2020.


                General Electric is not for everyone- it's a long term investment. I would say plus ten years. I would like to see them increase net income, revenue as a whole, I would need more debt to be paid off to put more money into it.. and I would like to see the dividend be eliminated until this can be done. But I do have faith that they will be prosperous again- I'm just not sure when. I won't go long until these things are accomplished, but I will have fun playing these dips every time a bonehead analyst says something negative.

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