My best bowls: General Electric (GE)

After JDS Uniphase, I told myself that I had to completely change course. Rather than betting on small startups, I had to bet on very large, solid companies that had proven themselves. In the 2000s, General Electric was, in terms of market capitalization, roughly the equivalent ofApple Today. It was a huge conglomerate with very solid financial backing. The company, founded in 1892, had been included in the Dow Jones Industrial Average since 1907, the longest-ever presence of a company in this index. GE was therefore the complete opposite of JDSU.

It was the end of 2000, the market had already started its descent and I told myself that it was the perfect opportunity to acquire this wonderful nugget at a good price. A company like this could never go bankrupt. It was so huge, that it was like buying a investment funds, without having to pay management fees. I was so excited that I even brought a friend along for the ride. I was kicking myself...

I don't remember exactly when I closed my position. Again, it was much too late, much later than JDSU, as I had such confidence in GE. Fortunately, I did end up getting rid of it, shortly before the subprime crisis. I was finally starting to understand that the stock was too expensive, even though I had already lost almost half of the amount invested...

Why I bought it

I was looking for quality. With GE, I seemed to get it. I read a book about Jack Welch, the CEO of the conglomerate at the time. I fell in love with the company.

My mistakes

• Having bought a title just for its history and reputation
• Not cutting my losses much sooner
• Falling in love with a title
• Buying a stock that is too expensive relative to its fundamentals

What I learned at the time

Quality isn't everything. GE certainly wasn't in any danger of bankruptcy, but its stock history proved to me that the loss can be just as great if you buy a stock too expensive. Love is blind, even in the stock market.

What I didn't learn at the time

Business fundamentals were still a vague concept to me at the time. I also still hadn't understood the importance of cutting losses quickly.