General Electric (NYSE:GE) reported Q2 earnings down 14% year over year and acknowledged that full-year EPS would likely come in at the low end of its prior forecast and negligibly higher than last year's $1.51 per share.

The drop in second-quarter earnings accompanied a less-than-1% increase in revenue, which CEO Jeffrey Immelt ascribed to positive but slow economic growth. Shares barely budged, trading today at $28 and change, a third above their 52-week low.

GE is perhaps the most widely held and followed stock in the U.S. It's consistently No. 1 or 2 in market capitalization and is the largest non-retail, non-oil, non-auto company in annual sales. As evidenced by its chart, it once made a lot of long-term shareholders very happy.

But let's look ahead, not back. A multinational conglomerate, General Electric, like peers Berkshire Hathaway (NYSE:BRKA.), Tyco (NYSE:TYC), and United Technologies (NYSE:UTX), is essentially a collection of unrelated businesses. True, GE obtains a large part of its revenue from one line of business -- financial services -- but other critical operations such as power and medical systems are unrelated.

All companies depend on management skill when allocating capital, but as highlighted in a very provocative discussion about GE and Berkshire Hathaway on our discussion boards (which words alone are worth the subscription!), the typical conglomerate's survival too often depends on an individual charismatic leader. GE buys and sells businesses to move capital to more productive uses (ex-CEO Jack Welch masterminded this for decades), while Berkshire buys but so far doesn't sell, instead diverting cash flow to Warren Buffett and Charlie Munger to invest.

What happens when they're gone? To imagine the worst case for what can happen post-Welch and post-Buffett and Munger, look no farther than Harold Geneen, who in 18 years built ITT into a conglomerate of 150 businesses in 57 countries. Don't remember ITT? It died a long, slow death after Geneen's departure.

The most widely held companies become the most widely held companies because there's a consensus that they are safe -- remember General Motors (NYSE:GM) and AT&T (NYSE:T)? They become talismans. Investors buy the reputation, not the business. How many shareholders even know that GE revealed a year ago March that it had $43 billion in off-balance-sheet special-purpose entities (yes, SPEs, the Enron thingies), much less what's happened to them, or how to evaluate what risk, if any, they present?

Whether GE's financial disclosure is sufficient or the SPEs present risk remains to be seen. By its existence, the very question augurs that GE is not only not "safe," but a company whose complicated businesses and financials are appropriate only for investors with an exhaustive knowledge of financial statements.

Don't despair! If you want to own individual stocks but the thought of GE's SPEs makes you cry, you can always buy a low-expense stock market index fund. These funds are weighted by market capitalization, so you'll get plenty of GE, but enough other stuff to balance your risk.

What's your opinion? Let it fly on our General Electric discussion board!