Boston Magazine has an article on GE CEO Jeff Immelt. They note that the stock price has gone down from $40 per share to $29 during the 16 years that he has run the company. Adjusted for inflation, that’s nearly a 50-percent decline ($40 in 2001 is equivalent to about $55 today).
A Google Finance chart of GE versus the S&P 500 confirms the dismal performance of this stock.
What do readers think? Was GE just so crazily overvalued, even after the Crash of 2000, that the stock had nowhere to go but sideways? Revenue in 2001 was $126 billion and earnings per share were $1.41 (annual report). The 2016 annual report shows $113 billion in “industrial segment revenues” and $1 in “continuing EPS” (GAAP measures) and $103 billion in revenue and $1.49 using non-GAAP techniques. So the company’s performance has become incomprehensible to laypeople in the intervening years, but revenue and profits do seem to have stagnated. How can this be in a world that is ever-more-friendly to the biggest companies?
[Not everyone is suffering. Boston Magazine notes that shareholders paid Immelt $21 million last year. He spent a full four months of salary on a modest dwelling: a $7.5 million Back Bay townhouse.]
- 2003 Slate article on GE executives underperforming
- Stocks for the Long Run, the investment classic that my money expert friend says can lead to infinite wealth. If you are in fact sure that stocks will outperform bonds over the next 10 years, for example, you can work with options and futures to pick up guaranteed risk-free cash. (This is in case you don’t want to get infinitely rich by starting a company with a 100-percent female workforce, which Hillary Clinton and Elizabeth Warren say will do the same work at much lower cost than what your stupid competitors are paying their workers who identify as male.)