July 13, 2011 – An Evening with Jack Welch

Featured Trades: (A NIGHT WITH JACK WELCH), (GE)

 

3) An Evening with Jack Welch. I met Jack Welch recently, the legendary retired CEO of General Electric (GE). 'Neutron' Jack gets the credit for boosting the market cap of GE from $13 billion to $400 billion in 20 years, turning it into a Wall Street darling in the process.

The 'hedge fund that makes light bulbs' is the last big industrial finance company standing, and it will make a fortune, because there is no competition left. Jack is currently on the board of a private equity firm, several Internet media startups, and is advising me on the startup of this newsletter.

He gives Obama an 'A' for leadership and communication, but believes his economic policies are seriously flawed. They are based on a 4% annual growth assumption for the next decade, versus my own forecast of 2.0%-2.5%. We never managed to achieve that rate during the go-go days of the eighties and nineties, let alone attempt it during a new age fraught with downsizing, deleveraging and frugality. If we get only 2.5% instead, the deficit will explode from $13 trillion to $30 trillion, at which point 'we will be cooked.' Who knew Jack was a closet gold bug, dollar bear, and inflation hawk?

Jack was passing through San Francisco at the end of a national tour promoting his wife Suzy's new book '10-10-10', which is about how to create a 'values driven life.' In his heyday, Jack was considered the best Fortune 500 manager in the country. Never one to mince words, he is an absolute terror now that shareholder feelings are no longer a consideration.

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