> This is a popular opinion, but I find it difficult to believe. It relies on the notion that stockholders are fools and unable to recognize when a company destroys its long term prospects for short term gain.
Not necessarily "fools". "Not experts" and "easy to influence" would be like it. Very much the trouble with the modern democracy: incompetents elect those who scream the loudest and say what they want to hear.
Like many others here, I experienced the short-term thinking firsthand. Reckless and pointless acquisitions and hiring spree to prop up the KPIs and scream to the entire world, "look how great we're doing!!!" is just one example.
> The trouble is, once the short term gain is there, who are the short termers going to sell to? A bunch of suckers?
Absolutely. The greater fool, sadly, is the foundation of much of the modern global economy.
I have too. The company stock tanked and the company disappeared. There's a word for short term companies -
"bankrupt". Investors as group are simply not that stupid.
You're talking to a group of people who think they know everything about anything from corporate finance to macro econ to philosophy. People here are generally technocrats with too little belief in others ability and too much belief in their own.
From my point of view, if a person was right that X Corp was sacrificing the long term for short term profits, and that nobody else has cottoned on to it, they would be making a fortune shorting the stock.
I.e. if they were so sure they were right, they'd be willing to put money on it.
As for me, as mentioned before, I put my money where my theories are. I'm a long term investor (riding the booms and busts up and down) and have done satisfyingly well for it. I've had my failures, too, riding Enron right down to zero :-) but overall it's been good.
Not necessarily "fools". "Not experts" and "easy to influence" would be like it. Very much the trouble with the modern democracy: incompetents elect those who scream the loudest and say what they want to hear.
Like many others here, I experienced the short-term thinking firsthand. Reckless and pointless acquisitions and hiring spree to prop up the KPIs and scream to the entire world, "look how great we're doing!!!" is just one example.
> The trouble is, once the short term gain is there, who are the short termers going to sell to? A bunch of suckers?
Absolutely. The greater fool, sadly, is the foundation of much of the modern global economy.
Look at any bubble over the last 50 years.