Out and up

摘要

In Jack welch's day, General Electric looked like a sort of magical mutual fund. GE would buy loads of companies priced at ordinary multiples of earnings. Once in the fold, they would be revalued using the GE premium, pushing ge's share price ever higher. This is a wonderful trick, but it can be repeated only as long as markets believe that the acquiring company can keep expanding its purchases' earnings at a faster rate or that it can earn just as much with less capital.