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Businesses have basically two kinds of products : stock and what they say they actually make. The latter is domain-specific; you always would need an in-house e
by unyttigfjelltol 3y ago
Businesses have basically two kinds of products : stock and what they say they actually make. The latter is domain-specific; you always would need an in-house expert as a leader to do it well. Selling stock is more general; an MBA from GE can do it effectively for Boeing or any other company. Thus in a world where CEO's hop around companies at the behest of Wall Street, stock promotion will always get more focus than the actual business. The incentives are broken and since Wall Street won't fix it all on it's own, that leaves Congress, which isn't any better.
- orwin 3y agoAren't stock price 'just' a performance indicator, all thing considered? Hence, aren't people always talking about improving the stock price just targeting the metrics instead of focusing on the interesting part?
- worik 3y ago> Aren't stock price 'just' a performance indicator, all thing considered? That is a hypothesis from the 1990s. Turns out that incentives need to be better aligned over time than what stock prices can manage
- FrankWilhoit 3y agoSaying that "incentives need to be better aligned" is like saying that the Sun is more than fifty miles up in the sky: (A) it is technically true, and (B) there are people who don't believe it.
- arp242 3y agoMore like whatever someone is willing to pay for it. There is correlation with performance, but it's far far from perfect, especially the kind of performance we're talking about here (long-term technical foundations). People $4,000 for brand-name Whatever™ designer clothes. It's not really worth $4,000 in any real sense, other than what someone is willing to pay for it.