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GE – 10 Years Going Nowhere

As a follow up to my Investment Strategies newsletter that many of you will be receiving in the mail today/tomorrow/at the whim of the post office (a copy of which is included in the previous post), I thought I’d give you a graphic illustration of why large cap blue chip stocks are likely to be a dangerous place to be in coming years.

The graph of GE above (courtesy of Gary Dvorchak) shows that over the course of a decade, GE – the bluest of blue chip stocks – has grown in price from $29 per share to $31 per share.

Americans will not be able to fund their retirement years with this sort of investment, particularly if they are buy-and-hold investors. If they actively managed their portfolios and sold when GE was at the top, then they could have made a nice profit. Unfortunately, that is not how most investors work.

This sort of pattern will likely be the norm going forward as our economy continues under pressure. Proper equity selection will be paramount to acceptable investment returns and risk management.