GE started out its life making refrigerators, toasters, and other "high-tech" devices in the early part of the 20th century. Previous to the General Electric inventions, housewives would simply soak their laundry in water, throw in a bar of lye soap, and have their thinnest child lean on the kitchen counter while they scrubbed out filth on their washboards.
But electric appliances weren't enough to GE, as company management felt that being exposed to one product line left them vulnerable to the economic cyclicality of upgrades. So they began to acquire companies in other, related industries in order to diversify the volatility of their product lines.
Because so many households bought appliances on credit, GE went into finance. The diversification acquisition spree ended up extending into television entertainment (yes, at one point they owned NBC) and went beyond. Diversification acquisitions aren't necessarily good...they are just a Thing.
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Finance: What is a Diversified Mutual Fu...20 Views
finance a la shmoop what is a diversified mutual fund? all right people
listen up it's lots of investments stocks bonds exposure to risk and reward [Risk and reward punch man in face]
everywhere energy, telecom, insurance, real estate, banking, chemicals, tech, retail not
enough diversity yet well those are just sectors or industries and there's a
whole bunch of them what about geography geographic diversity the US, Russia, China
Europe someday maybe Mars Elon what do you think well maybe exposures to [Elon Musk floating in space]
different currencies or commodities cycles as the diversity you seek hmm
well that's diversity Benetton eat your heart out so the bigger question is why
would you want such diversity? well the idea is that you mitigate risk by being
diverse the don't put all your eggs in one basket thing if one investment goes [Value of investment graph appears]
bust well at least you have plans B C and D to fall back on and if this is
grabbing you check out our videos on efficient markets theory for more on the
subject or maybe diversify your knowledge and watch all of our finance
videos food for thought and you know please click on the ads that we got to [Man holding begging sign]
eat around here
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