General Electric Company (GE)

General Electric's exposure to the capital markets often goes unrecognized. In reality GE has derived the majority of its profits from GE Capital for many years. Despite this fact, GE has outperformed most banks on a PE basis since the credit crisis began. Browsing through the "Underperform" pitches I was surprised that not one mentioned the pending possible bankrupcy of Metromedia, a corporate debtor of GE Capital. This situation may be a sign of the times, where poorly underwritten loans, originated during the debt boom of the early 2000's, may be coming home to roost. While energy conserving appliances may find a market in these difficult economic conditions, they will unlikely offset the decline in appliance sales for newly constructed homes. As such, these major business lines may see contraction over the coming year. Similarly, in the airline industry we are seeing a slow-down in orders for new planes as older planes are idled during the airline industry's race to reduce capacity. These are factors that I forsee weighing heavily on GE's earnings going forward.