Saturday, June 17, 2017

GE: The lesson for future retirees

GE is in some trouble. Stock buybacks over the past few years ate up their "running room" and did not yield the desired results. They have some troubled business units. And somehow they need to come up with 47B over the next ten years for existing retirees.

Bloomberg reports, "According to Dennis Rocheleau, a 36-year GE veteran who was its chief labor negotiator until 2004, the company considered its pension well prepared and thought its investing prowess could help keep the plan in shape. No one could foresee the financial crisis or the rock-bottom rates that followed."

Fifteen years ago, my financial advisor told me the day I retired he would put everything in a bond ladder.  Today, of course, it is 60 - 70% stock chasing returns, (though at higher risk). What changed? Those rock bottom rates Mr. Rocheleau refers to.

A well placed CNBC article reports not saving enough for retirement early enough is the top financial regret most people have. But what if you did save? And then the financial crisis and the rock-bottom rates that followed damaged your nest egg, (because they probably did).

Part of this is much ado about nothing. If you are trying to buy municipal bonds, you have probably noticed you are not alone in the market. Yes, there was a financial crisis - followed by seven or so really good years depending on how you count. Most individual investors should be back, or even up from the crash. So now what?

Observation: Signs are increasing that GE should not be held long
Orientation: I have 2k shares in MLs, Don't worry about ETFs
Decision: Look for a replacement holding
Action: Communicate with broker, they will not be a good long choice over the next decade.

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