3 ms·
Simonsarris, I agree completely and would add that the common theme with all these "strategies" is that it is directly related to improving the short term stoc
by wtvanhest 15y ago
Simonsarris,
I agree completely and would add that the common theme with all these "strategies" is that it is directly related to improving the short term stock price rather than the fundamentals of the businesses.
*The last part of your comment about "Part of the blame lies on companies/CEOs. Part of the blame lies on speculators/investors who turn into doomsayers overnight if every quarter does not look incredible compared to the previous."
is especially true with growth companies where the price to earnings ratio is far above market average. When this happens, they need to continue delivering exponential growth and when they fail to do so, that is when the stock drops considerably.
That being said, equity analysts see growth companies bust every year, year in and year out. Management is rarely presented with the opportunity to be the CEO of a high growth company more than once. (high growth companies are extremely rare, once they stabilize, management usually sticks around for the big paychecks.)
Because these events are rare in CEO's careers, they make blunders thinking they can trick analysts. This rarely occurs, and mainly with fraud rather than business tricks.