In 2001 I co-authored an article that called General Electric (NYSE: GE) “an overcomplicated company with an unbalanced portfolio.”  In an April, 2003, article we called GE “an accident waiting to happen.”

Here’s an excerpt from the 2001 article that explains my disdain for GE at the time:

“As Jeffrey Immelt takes over for the legendary Jack Welch, he assumes the top spot at a company with 24 truly separate businesses, from aircraft engines to appliances to mortgage insurance to a television network. And each of the 24 discrete companies manages additional business units and divisions: hundreds of them!

Is this diversification or diworseification? Consider these numbers: In 2000, total revenue for GE was $129,853 billion; GE Capital’s revenues were $66,177 billion, or 50.96%. Total earnings for GE were $12,735 billion; GE Capital had total earnings of $5,192 billion, or 40.27%. We think there is disproportionate risk in this disproportionate contribution.”

And although GE was able to use flexible accounting magic to come within pennies of its guidance for many, many quarters, time wounds all heels. GE put too many eggs in its lending basket, became a finance company, and has joined other finance companies’ suffering as the Fed’s easy money Ponzi scheme collapses.

This week Warren Buffett invested $3 billion in GE because Buffett knows a distressed asset when he sees one. But not all distressed assets can be rescued. In 2000 and much of 2001, GE stock handily outperformed the Dow Jones Industrial Average. From early 2002 through 2005, GE stock marched in lockstep with the Dow. Since 2006, GE has lagged the Dow, its share price dropping from around $42 to around $21 in just the last year.

Warren Buffett is often right, but he would be the first to tell you that he is not always right. Just ask him about investing in US Air. I think he’s wrong about GE. GE is still a can of worms, with too many operations, too little focus, and far too many accountants obscuring its finances. This house of cards has been held together for many years by GE Capital’s contributions to the bottom line, but now GE has to manage its actual businesses, and I don’t share Mr. Buffett’s confidence in GE’s business model or its leadership.