I thought about it and really couldn’t think of one. There are some good diversified ETFs out there, but why only limit yourself to an ETF and not a stock?
Now as many of you know, I focus primarily on small-cap stocks (read “Small-Cap Stocks the Place to Be—If Economic Growth Is Real”) and contrarian plays. Seldom do I venture into the big-cap stocks and blue chips, but that’s not to say these are not important to the overall success of a diversified portfolio.
So when I was asked the original ETF question, I was initially thinking of what diversified ETF I could recommend—but I quickly realized that the best answer was not an ETF.
I suggested General Electric Company (NYSE/GE), a company that is well diversified across many industries and geographical areas around the world.
First established in 1892 and with over 305,000 employees worldwide, General Electric (GE) is widely known as a huge company. When you think corporate America, you think GE.
GE has long been known as a “widow” stock, something that you buy and leave in your holdings for decades until retirement and then live off the strong dividends.
GE builds products and solutions for anyone from consumers to commercial enterprises. Providing kitchen appliances, aviation engines and systems, medical imaging solutions, healthcare products, advanced power systems, and energy management, the company has interests in many areas.
But the best thing about GE is that it’s strong in all of its areas and is a world-class company.
Just take a look at the price chart of GE from 1964 to today. It has been an impressive and steady ride overall; though there have been some hurdles since 2000.
Chart courtesy of www.StockCharts.com
In 2012, GE reported revenues of $147 billion and earned over $13.6 billion in profits.
At first glance, the growth may not look that great, with revenues estimated by Thomson Financial to grow at a rate of just 0.2% this year and 2.0% in 2014; but for GE, it’s all about long-term performance.
While you can certainly get a lot more growth from the technology companies, you have to question whether they will still be around in 50 years.
I know GE will be here for another 50 years, and that’s why, in my opinion, the company makes perfect sense as a comparable to a diversified ETF.