I own $300,000 worth of GE capital bonds. I bought them BEFORE this whole debacle, when GE was trading in the 30's and 40's and they were AAA rated and good as gold - that is, years and years ago. One matures in August (thank god) but the other in 2014. I am really, really, really getting nervous. I cannot afford to lose this money but there is no market to sell these illiquid securities except at a steep loss. It's obvious there is something extremely wrong going on at GE but is this just an equity thing or am I truly screwed potentially? Please...no wiseass shortseller "haha" stuff in reply. I made this investment in good faith for a 5 % return back when GE was like buying a CD before all this stuff even started, and several people will be dramatically affected in their lives if either of these bonds defaults. It's not a laughing matter.
Gee-so much for advice!
I don't know why you said these are illiquid. They are not.
Never never never should you invest so much in one basket. You never know what will happen with any one company. You should have bought bonds around 30-50k from various companies and sectors-sure it's more work but, you wouldn't be in this deep with one company.
So that being the case you should take your loss and pare back your holdings in GE bonds and keep it in cash or find bonds to replace it. The % won't be as great nor with the potential loss. PEP/CVX and NRL all have bonds out right now. Stay the hell away from the banks and the insurance companies.
If Immelt steps down (or gets fired)...this will rebound. I am short this stock because of him. I shorted in the $20's and when he's gone (or something drastic happens)...I'll cover.
hippodronex, I would not be loosing any sleep, as your anxiety is simply a reaction to the current valuations being assigned to marketable securities issued by GE. Which, in my opinion are completing off base.
Even low level service businesses have attractive economic characteristics (think a car dealer repair shop); GE is strong in many of the most sophisticated, demanding, and growing industries in the world, moreover, they possess a global footprint in every area they compete in. To further strengthen this position, they not only sell many of the sophisticated products that require the aforementioned annual service agreements, but also, they finance both the projects and service agreements.
GE capital, as is common by wall street analyst and amateur hedge funds/ mutual fund mangers, is being valued by simple extrapolation with assumption their assets are of know better quality than other large financial entities. Unlike many financial institutions during the boom, ge derived a very small percentage of income from securitisation gains; additionally, they originate to hold most of their assets in the retail space. Their residential mortgage portfolio is concentrated in western europe, which with exception of the uk and spain, did not have the massive increase in housing supply like the u.s (thus those markets will stabilize before the u.s. housing market).
Sorry you are in the position you are in. I too bought GE bonds for the same reasons you did. I held them in my accounts, my wife's accounts, and in my mother's accounts. In the past 3-4 months I have sold all of them in all three accounts. I took losses of 4-5% in doing so. That is a very acceptable loss considering the alternative of staying in and sleeping poorly. Take your loss and get out---you will sleep better and preserve most of your capital. Luck.
IMHO, GE will dump Jeff before Armageddon befalls the company. There's a very slight chance that the board might ask Jack Welsh to help out in some way; he still bleeds GE blood, but a new CEO is a must.
GE Capital is the fly in the ointment, what is taking so long to sell it isn't that clear to me; but they'd better get their act together with this drain on the company's financials.
Stockholders have far more to worry about than do you bond holders, & BK looks t/b less of an option when a conglomerate such as GE can spin off losing parts & keep the core intact.
Prayer might help!
I am in the same situation...I hold a GEC bond that pays a nice dividend but doesnt mature until 2032!It's value is way down. And yes, I too thought these things were secure. If they are secure, no problem -- I'll just keep getting the dividend. Otherwise, if they go bankrupt I guess I'm SOL. Anyone else have any ideas on what to do?
Turn off your computer, get off this message board, turn off CNBC. Go on a vacation and relax. We went through this in 1974 (the end of the world back then) and it turned out that 1974 was one of the best years EVER to invest for the LONG TERM.