There is a saying that goes, “when you’re down, there’s nowhere else to go but up”. Generally, traders don’t believe this. It does not follow that a stock will rise when it’s sitting well-below its average.
Jesse Livermore, one of history’s greatest investors cautions to “never buy a stock because it has had a big decline from its previous high”.
It remains interesting what approach will be the correct route especially in terms of General Electric’s future.
James Richman, the Latvian-born private investment fund manager, makes it even more interesting by making a bold forecast that GE will break the $10-level barrier. He even went as far as taking the contrarian approach against the Sage of Omaha, Warren Buffett, after the stock has temporarily touched the $5-level.
As the stock experiences recovery from its historical low, it is now poised to double its value.
A very resilient conglomerate
Through April 9, year-to-date, GE’s stock has fallen 36%. This means it has relinquished all its previous gains since CEO Larry Culp held the reign of the company in October of 2018.
The last month saw GE’s shares fall lower than its December 2018 floor at 6.66. Its price even loitered near the March 2009 low of 5.73 and slided up to 5.48.
However, this is not the first time GE has stumbled in the market. In 2008, General Electric was affected badly by the recession. During the period, its stock price went down by as much as 78%. While the broader S&P fell by 51% at that time, GE’s shares stumbled steeply from $27 to $5-level.
The company then made a continuous rally in 10 months. It had an 82% increase from March 2009 to January 2010.
This is almost double the S&P increase over the same period. It was also during this time that James Richman earned a whopping 200% profit from his initial investments. His firm was one of the few that was able to thrive during the financial crisis of 2008.
Popular and soon-to-rise
General Electric is still one of the most closely monitored and traded stocks on Wall Street. The average shares that go in and out, amount to 52 million on a given day. It is noteworthy that GE stocks earn a commendable 82 over 99 EPS rating.
The rating reflects the company’s standing on fundamental earnings. This goes with an SMR Rating of C which interprets its sales growth, return on equity, and profit margins.
These factors contribute towards the positive outlook that other investors are taking concerning the General Electric Company.
James Richman, whose investments have been successful due to his natural talent with pattern recognition, is someone who is quick to put his profits towards his philanthropic efforts as he is one of the investors who have pledged to increase their investments towards efforts fighting against coronavirus. He is also reportedly doubling down on his investments in the UK, particularly in London, the South East, Wales and Scotland.
Sources close to the Monaco-based investor reveal that despite the odds, Richman has already placed bets that GE stock will be back to the $10 level, and likely to put the profits to good use by increasing his socially impactful investments, especially during these tough times with the global impacts of coronavirus.