While most people have been mesmerized by this week’s wild stock market swings and the inversion of the Treasury yield curve another story also made the headlines too and that is a crash in the shares of General Electric.
A whistleblower that warned on the Madoff ponzi fund said that GE is playing accounting games and is toxic reminding him of Enron.
When he said this on Wednesday the GE stock collapsed and it fell almost another 10% on Thursday.
Now I also saw a hedge fund guy who I like say that he is buying and thinks everything is fine with GE.
If he is right it’s a huge buy and a lot of people want to believe it is, because right now it the second most widely owned stock by the most number of people on Robinhood.
When everyone owns one stock like this on Robinhood it gets a little scary, because then you have to wonder who is left to buy? Apple was the number one stock a year ago and then it became a stock market laggard after admitting that it’s Iphone sales growth peaked out last year, but I really have no idea whether GE is playing accounting games or not.
What I do know is that if you want to win at the markets then you want to be in the stocks that are outperforming the market averages that are in the best sectors of the market.
And GE has been a huge laggard for a long-time. Look at this chart.
As you can see the relative strength plot for GE on the bottom of this chart has done nothing but go sideways, because GE has lagged the S&P 500. The entire rally in January and February that brought all of the buyers in now looks like a mere bounce as the stock broke down this week.
But stocks that lag like GE has been doing all year often dump like this.
To beat the market you want to be in stocks that do better than the stock market and not worse!
While the S&P 500 has had a dip this month the mining stocks as a whole have gone up and Aftermath Silver even made a new 52-week high.
So here is my thoughts to all of those on Robinhood now buried in GE losses:
1)Learn the lesson this stock has given you and do not buy or hold on to laggards, but get into winning stocks no matter what some guy on TV may say about it (that goes for TSLA now too).
2)If it was me I’d sell GE and put that money into mining stocks and Aftermath Silver to not just make back the GE losses, but hopefully to make even more money! Some of them are dipping today on the open as gold and silver are gapping down for once to give an entry point.
3)I’d look to get into my private Power Investor group if you are not in it already. To do that go here: