GE (General Electric)
An investment mistake Duan Yongping admitted — “Looking at it today, I probably wouldn’t buy GE”
🏢 Company Profile
GE (General Electric) was a company Duan Yongping bought during the 2008–2009 financial crisis, and is also one of his admitted investment mistakes. His reason for buying was optimism about GE’s corporate culture, but later discovered that his understanding of GE “wasn’t thorough enough,” exceeding the boundaries of his circle of competence.
📅 Investment Timeline
| Time | Event | Duan Yongping’s Judgment |
|---|---|---|
| Before 2008 | Tracked GE for many years | Bullish on GE’s corporate culture, considered it a century-old enterprise |
| November 2008 | Started buying | During financial crisis, GE dropped below $10, started building position |
| 2009 | Bought more as it fell, GE hit below $6 at lowest | ”I just kept buying happily” |
| 2009 | Saw CEO Jeff Immelt publicly admit mistakes | ”It seems GE was the only company I saw coming out to admit mistakes and review countermeasures — this is probably where corporate cultures differ” |
| Around 2010 | Sold GE, rotated into Apple and Yahoo | ”My reason for selling was needing to rotate out of GE and Yahoo” |
| 2017 | Reflection in retrospect | ”Looking at it today, I probably wouldn’t buy GE; instead I should have bought Apple back then” |
💡 Why Duan Yongping Bought GE
- Bullish on corporate culture: Duan Yongping said “The reason I dared to buy heavily into GE was that, as a business operator, we had tracked GE’s corporate culture for many years, and from the bottom of my heart I believed GE was a great company.” (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-02-07)
- Being “greedy” during the financial crisis: Duan Yongping said “This is probably my turn to be ‘greedy’” — he bought when others were fearful, aligning with margin of safety logic.
- Seeing the CEO admit mistakes: Duan Yongping said “Among all troubled companies at the time, it seems GE was the only one that came out to admit mistakes and review countermeasures — this is probably where corporate cultures differ?”
- Clear valuation logic: Duan Yongping said “Here’s how I calculated when buying GE: When GE fell below 2 per share. As long as the economy normalizes, how can it not earn over 1.5 and giving it 15x PE wouldn’t that be over $20?” (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-03-23)
⚠️ Why This Was a Mistake
- Exceeded circle of competence: Duan Yongping later said “Looking at it today, I probably wouldn’t buy GE; instead I should have bought Apple back then. Because looking back, my understanding of GE wasn’t thorough enough, but Apple is a company I can truly understand.” (Source: Duan Yongping Investment Q&A (Investment Logic), 2017-05-22)
- Misjudgment of corporate culture: GE’s culture deteriorated after Welch; Duan Yongping didn’t see this clearly at the time.
- Debt as an exception: Duan Yongping generally doesn’t buy companies with heavy debt loads — “GE was the one exception” — this itself was a warning signal. (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-04-23)
💬 Original Excerpts
“Looking at it today, I probably wouldn’t buy GE; instead I should have bought Apple back then. Because looking back, my understanding of GE wasn’t thorough enough, but Apple is a company I can truly understand. However, at the time I thought GE’s culture was excellent and the company should be able to turn crisis into opportunity.” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2017-05-22)
“The US dollars I’ve lost in investing number in the hundreds of millions; every loss occurred while violating Old Buffett’s teachings, and all the big money I earned came from places I truly understood.” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-02-04)
“The reason I dared to buy heavily into GE was that, as a business operator, we had tracked GE’s corporate culture for many years, and from the bottom of my heart I believed GE was a great company.” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-02-07)
“Here’s how I calculated when buying GE: When GE fell below 2… Behind this is something not so simple — I could firmly believe GE was a great company, and after great companies make mistakes, their chance of recovery is very high. Actually there are plenty of people better at calculating than me, but knowing how to maintain such conviction is indeed not easy.” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-03-23)
📚 Investment Insights
- Be honest about the boundaries of your circle of competence: Duan Yongping’s understanding of GE was “felt the culture was decent,” but this doesn’t equal truly understanding it — true understanding requires deep industry experience like his investment in NetEase.
- Corporate culture can change: Good corporate culture isn’t permanent; it needs continuous maintenance. GE’s culture deteriorated after Welch — something Duan Yongping didn’t anticipate.
- Debt is a risk signal: Duan Yongping generally avoids companies with heavy debt loads; GE was the exception — this exception itself warrants caution.
- Opportunity cost: The money used to buy GE would have earned much higher returns if invested in Apple — showing that investments within one’s circle of competence are optimal choices.
🔗 Related Notes
Related Concepts Circle of Competence · Corporate Culture · Selling Logic · Margin of Safety Related People Duan Yongping Related Topics Duan Yongping’s Mistakes and Reflections Related Companies Apple (should have bought) · NetEase (truly within circle of competence)