The economics side of my brain got switched on listening to this. She knows her stuff here. She’s pinning the problem of current day economy on the market players. Companies have been having to spend excess energies working on shareholder returns rather than company building because of all the eyes watching the momentary fluctuations in the market price.
It’s a strong point. Think about what happens when a company’s share price drops? The shareholders want the chief officers’ heads on a platter, served up for media consumption – and that’s what they get.
Meanwhile, does the company still have land holdings? Is it still making a strong product? Is the entire value of a company narrowed down to its share price?
Of course it isn’t. Factors like price to earnings ratio are something that investors look for (I did – and it worked very well for me) – yet what does price to earnings have to do with a company’s viability for the long term?
Almost nothing: UNLESS the people start selling their shares to cash out quickly rather than waiting a quarter or a year for a rebound. Then it’s the INVESTORS that bankrupt a company: the company itself would recover had people waited ’cause companies don’t like loss of profit either.
That being said: Do i _agree_ with what she’s saying? I don’t know yet. It’s a different perspective than I’m accustomed to hearing and yet, it’s logical.
In any case, it was nice to hear an intelligent opinion.