Thursday, September 25, 2008
Wealth Destruction Continues (G.E.)
Anybody notice that G.E., roughly 1% of the economy and market cap of the U.S. equity market (or formerly so), now has a market cap under $240 Billion, down from over $500 Billion a decade (and 40% in inflation) ago?
Same with Microsoft, Intel, AIG (HAHAHALOLOLOL), etc...
Now go back in this blog to 2005 and 2006 and do a little reading...
We are ALL going to get considerably poorer here in the U.S. This is a phenomenon and we are only in the first 1/3 of the process. The G.E.'s of the world CANNOT increase their REAL (as opposed to NOMINAL) market capitalization (number of shares outstanding X the price of the stock) in an era of declining energy inputs. Maybe ONE of these companies, here and there, can, but not in the aggregate.
If you want to steadily lose your life savings, and be finished with it altogether in 10 years or so, just keep owning these investments. This is not to say that we won't have rip roaring rallies - we will. Or that INFLATION will not mask the losses in your portfolio to some extent - it will (and you will pay taxes on these illusory gains for the privilege), although the last 40% + in inflation did not do such a great job of masking the disaster...
The only companies that MIGHT be able to stave off disaster for investors, the Oil producers and servicers, will increasingly come under attack by the socialists on the Left for "Windfall Profits" tax. So you gotta do a little creative thinking...
And no, the Federal Bailout won't change the energy crisis one iota (unless we don't get a Bailout, then Oil could fall to $50, but unemployment will likely hit 20%... hardly seems worth the price of admission).
Back to G.E.... All of the huffing and puffing, sucking and blowing from all of the windbags at the trough will NOT be able to do a good fart about it. Listening to them will only demolish you financially.
Have a nice day!
Mentatt (at) yahoo (dot) com
Posted by The Short Story Man at 6:23 AM