Search results matching tag 'GE'

Six reasons to keep the faith in GE

Minyanville — Thu, 08 Oct 2009 14:46:00 GMT

This article is written by Minyanville's Glenn Curtis

Shares of General Electric (GE) are trading at a fraction of what they were just a few short years ago. However, they're well off their lows, and there are those that say the good times will soon roll again.

So what’s the skinny? And does it make sense to belly up before the earnings?

Here are some of my thoughts:

For more on today's earnings, see Upgrades & Downgrades.

1. Here's the aerial view: If someone is bullish on the future opportunities this great country has, General Electric is a clear and logical pick. Sure -- that's simplistic, but at the same, it's true. More people with coin in their pocket equals more want for appliances, engines, light bulbs, demand for entertainment, and all those good things GE offers up.

2. Now, is the road going to be full of potholes? I think so. I think we're going to see fits and starts and I’m skeptical about the near-term outlook for the macro economy, which I’ve said numerous times in recent months. But this economy will be righted, and things will turn around, make no mistake. And when they do, my gut tells me that GE’s shares will soar like Sputnik and there will be legions of people out there kicking themselves and wondering why they didn’t belly up to it when they had the opportunity.

3. As far as the third-quarter earnings later this month, the Street is looking for $0.20 and I think it will beat by $0.02 to $0.04. Of course, I’m more interested in what management will have to say about what the future holds. My sense is that they’ll be cautiously optimistic and offer a decent outlook.

4. Looking at some other things, there hasn’t been any insider buying as of late. Everybody seems to remember executives bellying up toward the beginning of the year when the shares were languishing under $10. But if one looks back to November 2008, it's interesting to see that insiders bellied up to the tune of 130,000 shares in and around the mid-teens. The fact that I can hypothetically climb aboard and be in a somewhat similar boat gives me some sense of solace.

5. Looking out a bit further, I think the current 2010 estimate of $0.89 will end up being quite conservative. Clearly its early in the game, but that’s my gut sense.

6. What about rumored Comcast (CMCSA) deal for the NBC Universal unit? I’m not sure how that’s going to shake out. But at the end of the day, there could be a positive there, too. If it shakes that business loose, some investors may view the company as more focused.

Hey -- have a great day!

No positions in stocks mentioned

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Is the 'junk' stock rally ending?

Anthony Mirhaydari — Thu, 17 Sep 2009 22:14:00 GMT

With the major indices trading near new highs, there is evidence that the most recent phase of the advance was fueled by the lowest quality stocks. And it looks like the tide could be turning.

Some of this has been caused by a scramble into the riskiest holdings out on fear of missing out on the rally and a desire to maximize exposure to the broad market. Short covering has played a role too as many of the best performers are among the most heavily shorted names. While this doesn't preclude additional gains, it does call into question the longevity of the rally.

According to Matthew Rothman of Barclays Capital, the end may be upon us. In his words: "Quality continues to underperform sharply, turning in one of the longest losing streaks in the index's nearly sixty year history. Wednesday saw the streak end."

(click for larger image)

Rothman maintains various quantitative stock indices, including one that focuses on quality. Others are based on characteristics like market sentiment and valuation. On the phone from New York, Rothman described his Quality Index taking into account things like historical profitability, earnings traits, and balance sheet structure.

However, there is no clear statistical link between the ending of a period where quality underperformed and any particular prediction on the direction of stocks in general or high quality issues in particular. Part of the problem is that it just doesn't happen that frequently. The most recent string lasted nine consecutive days. Rothman says that he has only seen 40 occurrences of streaks lasting seven days or more in the past 59 years.

A similar story is being told in the credit markets. Dave Klein of Credit Derivatives Research finds that high-beta companies are performing best in the credit default swaps market. The sectors looking the most extended are leisure, technology, telecommunications, and consumer cyclicals.

Should the market gods decide a selloff is in order, I would seek out quality names in the energy, healthcare, and media sectors based on where the respective credit default swaps are trading relative to equities.

My positions

My portfolio at Wall Street Survivor is up 3.7% for the week versus a 2.7% gain for the S&P 500. I was heavily focused on industrial and materials stocks like General Electric (GE) and Dow Chemical (DOW), but decided to assume a more defensive posture heading into options expiration this Friday. I still expect a slide in gold and silver prices.

Anthony Mirhaydari is a researcher for the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.

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Why stocks aren't overpriced

Minyanville — Wed, 16 Sep 2009 14:26:00 GMT

This article is written by Minyanville's Sean Udall

Listening to CNBC yesterday morning I was struck by two key things: First, there are obvious factors/evidence that many are choosing to ignore. Second, we should always be mindful of what may not be obvious and try to skate to where the puck is going to be.

However, sometimes the obvious meshes with where the puck is going. I find this especially true during times of great collective doubt.

Read Our Marionette Economy for an opposing viewpoint.

Post 1991, it was very popular to doubt the rally. We were at war and the S&L crisis was far from being declared dead. It was an incredible time to believe that stocks deserved to be pushed higher -- especially in light of numerous signs of profound growth in many industries.

Moreover, when I hear that the market price is "unjustified" by "current fundamentals," I simply know we're going higher in the intermediate term and longer. My point is, that statement is just factually wrong.

Aside from trailing P/Es -- which are hugely artificially depressed by the now-defunct FAS 157 rule -- the market is still quite cheap on nearly every other balance-sheet metric. Further, P/Es are rarely thought to be fair barometers of market valuation at and near earnings troughs.

Normalized P/Es adjusted for the accounting changes should be used, yet you'll rarely see these sorts of analyses in print. But they're used by CIOs and investment-committee meetings as well as complex blackboxes. And these are saying that stocks are still well valued against competing asset classes.

Additionally, I called for much stronger economic growth months back and was nearly universally ignored. Now that multiple signs of confirmation are at our backdoor, most pundits are simply choosing to ignore them. And those that talk about the strength are thought to be Pollyannas. So here's a short list of confirming data points:

Just yesterday we saw surprising strength in retail sales.

The semiconductor strength is far beyond a restocking effect and, if anything, we need a full inventory restock in the silicon food chain. When this happens, what will the numbers look like?

In my view, we'll see continual signs of technology strength in routing/fiber, wireless infrastructure, enterprise storage (very strong), and IT software installs. Again, this isn't inventory related.

Very strong numbers in US GDP, ISM (Institute of Supply Management), Philly Fed, and Empire reports.

Months of strength in Germany, the UK, and much of Europe.

Oh, and I'm no longer alone in my contrarian economic view: Goldman has joined the black parade, calling for stronger GDP growth on a macro level. On a micro level, it's been on an upgrade rampage in recent weeks and just a few days ago, upped the whole industrial sector, raising ratings and/or price targets on General Electric (GE), Danaher (DHR), Dover (DOV), 3M (MMM), Illinois Tool Works (ITW), Roper Industries (ROP), United Technologies (UTX), Parker Hannifin (PH) and Kimberly-Clark (KMT). I don't think Goldman would be doing this if they were betting on the double-dip trip. (Illinois Tool Works also just raised guidance yesterday.)

Aside from economic fundamentals, a primary reason I still see sizable upside in the coming months is because we still have multitudes of names like Google (GOOG), Cisco Systems (CSCO), Broadcom (BRCM), Microsoft (MSFT), JPMorgan (JPM), Nasdaq OMX Group (NDAQ), NYSE Euronext (NYX), and best-of-breed solar that haven't moved much given the improved backdrop.

So while a Baidu (BIDU) or Marvell Technology Group (MRVL) or STEC (STEC) may look like they've moved far too much off lows (but likely not yet), many more high-quality names have experienced a fraction of the move higher.

So while I called for a 7-8% correction (see buzzes) about 5% ago, I still see the forest, the trees, and the shrubs. And from my perch, I think we're far from seeing the majority of this total move off lows in a fairly compressed time frame. Even so, I'm still operating from my trading standpoint, and thus sticking with my correction call. I remain largely long, but with sizable hedges and proactive premium collection strategies while actively trading around my core Nifty 15.

Positions in GOOG, JPM, NDAQ, WFR, SPWRA, MRVL.

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Navios Maritime keeps on swimming

AllStarPortfolio — Mon, 14 Sep 2009 23:00:00 GMT

This is my maiden voyage into the world of stock analysis and I thought why not play it safe and write about the best buy in the world. Navios Maritime is a shipping company and probably one of the most conservatively managed shippers of the publicly traded companies. Shipping rates measured by the Baltic Dry Index (BDI) are down 65% yoy when the S&P 500 is down 25%. Much of the world is now becoming industrialized as the economies of Brazil, India, Russia, and China are growing and stabilizing and will continue to over the next decade or so, which will increase the consumption of half of the world population. This will increase shipping rates back to rates we have seen in 2008 in the coming years. http://caps.fool.com/player/allstarportfolio.aspx In the meantime, Navios Maritime has charter-out coverage on 99% of their vessel voyages for the rest of 2009. This is by far the highest rate in the industry and thus they have "locked-in" profits for 2009. They are chartered to make $0.67 per share this quarter not including any one times items or sales. They have already added 9 new vessels all capesize vessels which basically means higher charter rates and larger load capabilities. Navios Maritime also has a 81.4% charter-out rate in 2010 with an equivalent of $307 million in revenue, for a 20% increase yoy locked in. In addition, they have $300+ million locked in in charter-out revenue for 2011 and 2012 with only 63.2% and 57.7% of their days chartered-out respectively. This shows that Navios Maritime expects growth from today's earnings levels which are presently under valued with today's earnings power. Navios Maritime is currently trading at a P/E of 8 for full year 2009 earnings. With the 20% growth in revenue and assuming earnings as well they are trading at a forward P/E of 6.5. It does seem fairly safe to say that earnings will grow at a 20% clip over the next three years by looking at the incredible ability of the company to lock in charter-out rates of approximately $35,000 daily in 2012 and $30,000 a day in 2010 when the average daily long-term charter-out rate in 2009 was slightly above $10,000. Finally, as if guaranteed profits and P/E's of under 8 weren't good enough the company is actually trading at a 40% discount of its shareholder equity. Current shareholder equity as of June 30, 2009 is $850+ million dollars and shareholder equity grew by 8% last quarter. The current market cap is $531M. In conclusion, I picked Navios Maritime for dissection because this is they type of company I would like to see my readers (the few of you) and future readers to buy. You must start with fundamentals. You would never use $500 million of your own dollars to buy a company on a technical breakout on a chart so don't do it even if your buying a portion of the company. Navios Maritime really impresses me with their debt. It is just over a year since Lehman and a companies balance sheet seems to be the only thing that matters now. Navios Maritime has been receiving new loans at 6% interest in a time when GE and Goldman Sachs took out loans from Warren Buffett for 10%. Navios Maritime currently has a 4.5% yield with an expected payout ratio of 35.8% which is considered fairly safe. They have $210M in cash and they have purchased 6 vessels at a 6% interest rate during a credit crisis. A lot of lenders believe in Navios Maritime's ability to pay off debt and the savings from low interest rates will be seen directly in net income and thus stock prices. I see Navios as a long-term contender to overtake DryShips as one of the largest shippers in the world. I currently have a price target of $14. Which would allow for a p/e of 12 next year and a dividend of 1.7%. AllStarPortfolio is a group of top-rated members of the MSN/Motley Fool Caps community working together to build a portfolio using the reader-rating system. At the time of writing I currently own shares of Navios Maritime [NM]. stocki711, member of AllStarPortfolio All information from Navios Maritime was taken from their most recent quarterly report or their most recent annual report with the most current statistics used in the event of both reports containing information pertinent to the article.

Goldman CEO tops Vanity Fair list

Douglas McIntyre — Tue, 01 Sep 2009 10:51:00 GMT

Vanity Fair has announced its “New Establishment 100″ list for 2009, basing selections on wealth, influence, and philanthropy, as well as such intangibles as vision and "X factor.”

Topping the list is Goldman Sachs (GS) chief executive Lloyd Blankfein. Apparently, the big pay packages that he and his top executives get are not enough to erode his power in the business community. Blankfein was in the No. 2 spot a year ago.

Second on the list is Steve Jobs, chief executive of Apple (AAPL). He should arguably be at the top. He is clearly the most influential and powerful chief executive in America, taking a role that Jack Welch of General Electric (GE) once had.

Third on the list is Jeff Bezos of Amazon (AMZN). He has turned a rather prosaic e-commerce business into a digital powerhouse. Fourth on the list is Warren Buffett of Berkshire Hathaway (BRK.A), whose investment performance was poor over the last year, but still probably has the best track record of any major investor in the last half century.

Rounding out the top five are Eric Schmidt, Larry Page, and Sergey Brin, the leaders of Google (GOOG). It is a bit of a cheat to look at them as a group. It is also open to question whether they belong so high on the list. Google’s fortunes have flagged over the last year as its growth has slowed considerably.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Return of the $1 salary

Douglas McIntyre — Mon, 24 Aug 2009 11:02:00 GMT

Steve Jobs worked at Apple (AAPL) for $1 a year in 2000, just before the launch of the iPod, which completely changed the company’s fortunes and made him astonishingly wealthy. Lee Iaccoca worked for $1 in 1978 when he took charge of crippled Chrysler.

The dollar-a-year tradition has fallen on hard times. The most recent apostle of the practice was Edward Liddy who took the chief executive’s job at American International Group (AIG) when it was deeply troubled. He had been the head of Allstate (ALL), so he probably did not need to make several million dollars.

Liddy took the job as a public service, an action which seems to be both anachronistic and idealistic. Liddy worked hard to restructure the insurance company, but was derided mercilessly by Congress because AIG executives received large pay packages on his watch. The irony of this issue was that Liddy had nothing to do with the compensation agreements.

Liddy was replaced by Robert Benmosche, the former chief executive of MetLife (MET). Benmosche presumably is wealthy enough to work for nothing, but insisted on being paid $7 million. The taxpayers who own 85% of AIG are appropriately enraged that AIG let Liddy leave.

Much to the surprise of a number of compensation experts and probably the company’s shareholders, Larry Ellison, the founder and head of Oracle (ORCL), has decided to work for $1 in base salary in 2010. It would be easy to take a cynic’s view of the decision. Forbes says Ellison is one of the ten richest people in America.

Ellison owns 23.4% of Oracle’s stock, so he has every reason to make certain the company does well. But other corporate founders, including Howard Schultz of Starbucks (SBUX), have seven figure base salaries even though their shareholders have not done well since the market sell-off began in the fall of 2007. Ellison’s decision is all the more remarkable because Oracle’s stock has outperformed the market by a very wide margin over the last two years.

Ellison understands shareholder sentiment and is willing to have his compensation tied to corporate performance, something that most chief executives are not willing to do. Shareholders in large American companies were comfortable when management received big compensation packages during the 2002 to 2007 bull market.

The idea of most CEOs making millions, if not tens of millions of dollars, after that run-up turned into a sharp slide was obscene, the same shareholders reasoned. Goldman Sachs (GS) has received the most criticism because it appears that it will pay out record bonuses for its current fiscal year. The investment bank took government TARP funds. Goldman’s management, of course, argues that it paid that money back. Its shares have not recovered entirely, however. Late in 2007, they traded at just below $250. The stock now sits at $163, so the share price will have to rise a long way to support the case that Goldman Sachs has taken proper care of shareholder interests.

Goldman’s situation is a case in point, but it is beside the point. Boards and managements may choose to ignore the chance that the federal government will work to restrict pay packages, but it is foolhardy to ignore public sentiment. By some measures, 10% of Americans are out of work. Some of those people worked for AIG, Starbucks, and Goldman Sachs. Firing people while drawing a multi-million dollar pay check is not an endearing act.

Many major companies have arranged for management to be paid large performance bonuses and to get valuable stock option and restricted stock grants. That should be enough incentive to do a good job, that plus pride in having done something beneficial to shareholders. But, those things don’t seem to matter much at most firms.

It is easy to pick though proxies to find executives who are overpaid. Jeff Immelt, CEO of General Electric (GE) gets a base salary of $3 million. The company’s share price is down about 65% from its peak less than two years ago. Immelt is easy to attack because of his high visibility, but he is still a good example of an overpaid CEO who has not voluntarily and symbolically taken a pay cut.

The general population of public company shareholders cannot fathom why someone like Immelt makes $3 million. They don’t understand why the government would let Benmosche at AIG make $7 million after all the taxpayer money poured into the company. Theses compensation numbers are inappropriate, not because the people who run these companies are inexperienced or greedy. They are inappropriate simply because the firms are doing poorly.

Larry Ellison is working for $1 a year. His board would have given him more. He has done a good job for his shareholders. But, at some point recently, it must have occurred to him that the people who work at Oracle have made sacrifices and some have even lost their jobs. Oracle’s stock is at a 52-week high, which very few companies can claim, but the firm is still suffering the effect of the recession.

It’s too bad that a number of CEOs won’t follow the Oracle chief’s move. But, it is almost certain that not a single public company chief will read about Ellison’s action in the paper this week and follow suit.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Get ready for 'cash-for-washers'

Anthony Mirhaydari — Thu, 20 Aug 2009 19:22:00 GMT

With the Obama administration planning to wind down the popular $3 billion cash-for-clunkers auto rebate program, there is already talk of a similar program to encourage the purchase of new appliances.

The "cash-for-washers" program will start late this fall and will provide incentives for buyers of energy efficient appliances, furnaces, and air conditioners. Total funding of $300 million comes from the $787 billion stimulus package passed earlier in the year. Rebates are expected on reach upwards of $200. To quality, purchasers must buy Energy Star certified units; trading in old models won't be necessary. Expect more details sometime in October.

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Naturally, this is great news for appliance makers like Whirlpool (WHR) and General Electric (GE), which have struggled as consumers have cut back purchases of high priced items and new-home construction has stalled. But what impact will it have on the economic recovery?

According to Deutsche Bank economists, only about 20% of the economy -- which includes business investment, consumer durables, and residential investment -- really drives the fluctuation of the business cycle between expansion and recession. The other 80% tends to not move.

The good news is that even before the cash-for-clunkers or cash-for-washers programs start having an effect, spending on consumer durables already appears to be bottoming. Much of this was driven by some improvement in the auto sector. Auto sales, which had been averaging 16 million units annually over the last decade, have fallen to just 10 million units recently. This is below the 12.5 million annual rate at which old clunkers are taken off the road. This is unsustainable, as the number of vehicles on the road is decreasing as the population continues to grow. Families are slowly paring back to two cars from an average of 2.3 cars, but they do still need to replace their clunkers -- with or without government assistance.

So, along with an increase in appliance purchases, the consumer spending component could help GDP growth really surprise to the upside later this year.

Both GE and Whirlpool look like buys here, but Whirlpool is the more direct play. GE is weighed down by the troubles in its GE Capital unit, so the stock tends to trade along with the financial stocks. Whirlpool has been focused on cutting costs to help maintain profitability as revenue growth slows. With a leaner operation, we should see a big earnings pop should the cash-for-washer program prove successful. I will add Whirlpool to my portfolio at Wall Street Survivor.

Disclosure: The author does not own or control a position in any of the funds or companies mentioned.

Anthony Mirhaydari is a researcher for the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.

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Stocks falter at the 'Obama high'

Anthony Mirhaydari — Tue, 18 Aug 2009 16:03:00 GMT

Although stocks are tracking higher during trading on Tuesday, they have only retraced half of Monday's losses. To recap, stocks tripped at the opening bell on Monday and laid flat on their face the rest of the day as a global wave of selling that started with declines in Asia and Europe flooded ashore in Manhattan. As a result, the major indices fell out of their August trading ranges.

Technically, the decline happened right on schedule as the market reached the so-called ''Obama high''; which marked the apex of positive political sentiment reached on Election Day last year. Prior to that point, the S&P 500 had slid as low as 850. Then, it reversed and moved over the 1,000 level before finally succumbing to another wave of selling pressure in late November.

Bing: More on Fibonacci Levels

The top last week was 1,014, which was also a picture-perfect 38.2% Fibonacci retracement of the October 2007 high to the March 2009 low. I talk a lot about Fibonacci levels and how ratios that occur with great frequency in nature are often reflected in the behavior of stock prices. To many, this probably seems like metaphysical hooey. And maybe it is. But if enough professional traders are using the same set of trading rules, the indicators will still be meaningful simply because so many people are using them.

The evidence continues to suggest that the broad market may well be in the early stages of a bull cycle. But that doesn't provide immunity from periodic selling spasms. In this case, there are a number of developments that lead me to believe that the bears aren't done yet.

For one, we saw some significant weakening among shares of industrial firms. These stocks, which include General Electric (GE), Boeing (BA), and Caterpillar (CAT), are harder to manipulate and tend to filter out some of the speculative excesses that plague bank, technology, or housing-related stocks. The fact that they declined so hard is a sign that the selling pressure is genuine and it's intense.

According to the market experts at Lowry's, Monday's action represented a 90% down day -- with down volume representing 94% of the total volume on the NYSE. This is the first 90% down day since the middle of June, which marked beginning of a market swoon that saw the S&P 500 lose nearly 8%. Typically, in the wake of the 90% down day, we see a rally lasting two to five days as the bears re-arm and plan their next strike. Many short-term indicators are still flashing overbought, so it's unlikely we've seen the last of the decline.

We also saw a huge 14.9% increase in the CBOE Volatility Index ($VIX.X), which is the largest one-day change since the middle of April. The VIX, as you know, is derived from S&P 500 options trading in Chicago and is a proxy for the level of fear and uncertainty felt in the equities market. After declining 51% since the March low, mirroring the 47% decline in the S&P 500 through last Friday, the VIX has now moved back to early-July levels. This could be signaling the beginning of a new period of acute risk aversion -- another potential negative for stocks.

From here, I expect to see a retest of the neckline of the inverted head-and-shoulders pattern has developed in the past 10 months. If the pattern holds, the decline would be limited to the 940 to 955 level on the S&P 500 -- about 4% lower than Monday's close. If this level breaks down, bears would aim at the July lows around 880.

Disclosure: The author does not own or control a position in any of the funds or companies mentioned.

Anthony Mirhaydari is a researcher for the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.

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Why the dollar is set to strengthen

Anthony Mirhaydari — Mon, 10 Aug 2009 19:21:00 GMT

There has been a curious shift in behavior of the U.S. dollar in relation to equities: Both stocks and the dollar rallied hard on Friday. The dollar was up 1.5% vs. the euro on Friday and even more against the yen, the largest one-day gain since early June before the stock market swooned. The dollar is up in Monday trading as well.

This is a reversal from the negative correlation we've seen between these two assets lately as one rises and the other falls. The correlation isn't perfect, but it's noticeable. I have always viewed any analysis of currency movements with great skepticism because of all the cross currents that affect their movements: Trade balances, relative interest rates, monetary policy, and so on.

Bing: More on the dollar

However, the huge increase in risk appetite among traders over the last few months has clearly driven many U.S. investors to embrace emerging and frontier economies, especially in Asia. We have seen dollar weakness as these investors move their portfolios out of dollars and into foreign currencies. If this pattern is changing ahead of an increase in risk aversion, then we could be seeing big institutional traders hedge their foreign positions by buying dollars to make it easier to repatriate profits and move back into cash. The idea being that if global equities selloff, investors will want to quickly shift capital into more defensive assets such as U.S. Treasuries.

Of course, a rising dollar would spell trouble for the American export sector -- which the bulls hope will compensate for a weak, overly indebted consumer and help power the economic recovery. A stronger dollar would make U.S. goods abroad more expensive and thus less popular. Moreover, it would impair U.S. multinational companies' earnings when foreign profits are translated back into greenbacks. This is bad news for the likes of General Electric (GE) and Caterpillar (CAT).

The best way to play a dollar recovery is the PowerShares DB Dollar Index Bullish ETF (UUP). The fund is based on the Deutsche Bank Long Dollar Index that replicates the return of the dollar against a basket of currencies including the euro, yen, and Swiss franc among others. I've added UUP to my portfolio at Wall Street Survivor.

Disclosure: The author does not own or control a position in any of the funds or companies mentioned.

Anthony Mirhaydari is a researcher for the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.

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The small price to pay for financial fraud

Minyanville — Thu, 06 Aug 2009 16:28:00 GMT

This article was written by Minyanville's Megan Barnett

If you knew that you might only have to pay $1,000 if you got caught committing securities fraud that would net you $100,000, would you do it? What if I said you could pay the grand and not admit guilt? Would you do it then?

These may not the precise questions that C-suite executives ask themselves when they decide to travel down that fateful path of securities fraud, but given the example set by the Securities and Exchange Commission, perhaps they should.

This week, the SEC reached settlements with two corporate giants: Bank of America (BAC) and General Electric (GE). The congratulatory announcements by the SEC made the regulators seem like tough cops on the beat. Bank of America paid $33 million to settle charges it misled investors about the billions in bonuses it agreed to pay Merrill Lynch employees after acquiring their firm. And General Electric paid out $50 million put an end to the allegations of accounting fraud.

(View Slideshow: The Small Price to Pay for Financial Fraud)

Now, $83 million sure sounds like a lot, especially in times of empty government coffers and bankrupt municipalities. But in the world of Wall Street and multi-billion dollar corporate conglomerates, it's all about perspective.

Bank of America's fine was a tiny fraction of the bonus money contested. Less than one percent, to be precise. If the government is serious about ending the exorbitant paydays on Wall Street, evidently the SEC did not get the memo. Other banks that are currently facing similar bonus conundrums might pause to ask themselves why they're bothering. As Reuters columnist Felix Salmon wrote earlier this week: "I were Citigroup (C), and the Feds were telling me not to pay Andrew Hall is $100 million bonus, I’d be inclined to just pay it anyway. And then sheepishly apologize and pay a $920,000 fine. So much easier than doing the right thing from the beginning."

As for General Electric, don't believe the hype that the SEC was the victor. As is often the case, the lawyers were the real winners.

After a four-year investigation, the SEC found that GE had used improper accounting methods to boost its earnings by more than $1 billion during a two-year period. With this week's settlement, GE puts the matter behind it without admitting guilt.

And what about that $50 million? General Electric proudly admitted it spent four times that amount on the lawyers who negotiated it for them. Well done!

Click through the slideshow for more examples of swindling the SEC.

No positions in stocks mentioned.

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