In Focus: GE & Friends
Thanks for checking out In Focus, my look into a company, companies, markets, or trends that made Wall Street's news cycle. This week I bring General Electric and Friends In Focus.
"Friends, how many of us have them? Friends, ones we can depend on..." - Whodini
Markopolos Vs. G.E. and Its Friends
This isn't specifically a General Electric story. General Electric is a dumpster fire. Call me crazy but I believe the trained accountant. The person that has studied cooked books of the past to build his knowledge on fraudulent accounting. If this trained professional say's someone is cooking the books, it would benefit me to listen and stay away from the book cooker. But there are other options as well. I could conduct my own research to figure out if I see what the accountant sees, or I could find something that the accountant may have missed. But what I won't do or shouldn't do is ignore the professional's findings just because I'm a believer in the company or person being targeted.
Of the interviews I've watched featuring Harry Markopolos, specifically the CNBC interview and the Yahoo interview, I saw a lot of push back on Mr. Markopolos' findings, but it didn't appear to me that it was push back attributed to good journalism, it appeared to be more of a "how dare you" type push back.
Jack Welsh and Jeff Immelt, former GE CEOs were friendly guys from what I've been told. They both carried a wide range of influence and use it to help many, and that's great. But the generosity of Welsh and Immelt to the people we watch on business television shouldn't prevent those people from being honest about a sh!tty company. Especially, if these TV people really believe that their business news programs are there to help the people navigate the markets. Is CNBC and Yahoo serving Jack and Jeff or are they serving the people? They claim to be serving the people, but from the Harry Markopolos interviews they serve Jack and Jeff.
While Jack Welsh was seen as a great leader, mover, and shaker who was able to get a 4,000% rise out of GE's stock price during his tenure, Jeff was anything but that. Under Immelt, GE's stock lost over 30% of its value in his 16 years on the job, but everybody loved him.
The Tale of Two Jim Cramer Interviews
This one. With Jeff Immelt in February 2017. GE's stock traded at around $28 to 29 per share then. When Jeff Immelt took over GE in 2001, the stock traded at around $38 to $39 per share.
This one. While the first interview was friendly with Immelt, who had done nothing for shareholders. The second interview, with Immelt's replacement John Flannery gets heated. Oddly though, Cramer is questioning the new CEO about the screw ups of his friend Jeff Immelt. In the interview Cramer shifts blame to GE's board of directors for GE's current position then, not Jeff Immelt.
The Saint, The Degenerate, and The Thief
If you are new to investing or new to watching or paying attention to investment related media, here is something else that may cause you to scratch your head. General Electric engaging in fraudulent activity is not new. They've done it before and were caught and fined for it, you can read more about it here. Markopolos isn't pointing to a saint and accusing them of being a degenerate. He's pointing to a thief and telling the people, the thief is stealing again. Yet, investment media has somehow turned GE into the saint and Markopolos into the thief.
Who's Paying Who and Does it Matter?
The question of which hedge fund paid for Markopolos' research has been a point for pushback on Markopolos' findings. This is another game of deception played by media to sway the average investor. For those that are new to investing, hedge funds and investment companies pay for market research, it is a part of doing business. Usually the research doesn't make as much noise as this report has, but buying research or commissioning someone with a skillset like Markopolos' to do research is something that happens.
Because he is being compensated for his research doesn't lead to me believe that his research is any less credible. Especially when the research is about a company that has been a dumpster fire for almost 20 years and has been accused of accounting fraud in the recent past.
People's hangups on who is paying who has caused massive losses in fraud cases in the past. Using Harry Markopolos again, he investigated and pointed out to the Security and Exchange Commission (SEC) in 2001 that Bernie Madoff wasn't on the up and up. Markopolos' findings were ignored in 2001 by the SEC and some major media outlets, because he worked for a competitor to Bernie Madoff's fund. Madoff was officially exposed and arrested in 2008, but how many billions of dollars did investors lose between 2001 and 2008? Because the smoking gun came from the competition the authorities felt it not worthy enough to investigate.
They Don't Serve You
Everyday when regular folks who are attempting to save and invest their way into a better financial situation turn on CNBC, Fox Business, or Bloomberg, they do so with the idea that these companies, these TV anchors are in their corner, wanting to help them get to that better financial position. I want to warn you that they are not in your corner. Those shows, those anchors serve CEOs, they serve Wall Street, they do not serve you or I. When an accountant, trained to detect fraud, points out where fraud is taking place, it shouldn't be overlooked by the investment media because the target of the investigation is their friend.
No one wants to hear bad things about their friends, or that their friend f*cked everything up, but if they did, they did.
A hip hop media icon once told her understudy, that in their business you either serve the record labels or the artists, pick a side and stick to it. It was a great advice. From the recent interviews with Harry Markopolos it is obvious that the major investment news