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American Innovation Lies on Weak Foundation?

nytimes.com

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Re: American Innovation Lies on Weak Foundation?

#11

Post by WalterBright »

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly.

I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it.

The charge that companies are eating their seed corn to satisfy wall street assumes that investors are monumentally stupid. Share prices are based on the collective best estimate of the future value of a company. Any hint that the company has sacrificed the long term for the short term will tank the stock value.

Re: American Innovation Lies on Weak Foundation?

#12

Post by rifung »

toomim wrote: post #2

This whole article is assuming that innovation comes from money, and specifically from the money labeled "R&D" in the budgets of nations and companies. Yet, most startups started on shoestrings. Then they got investment from VC firms. These sources of innovation don't come from NSF or Microsoft Research. And American innovation comes from far more than money. The culture of American innovation is a huge factor, which…

I don't think startups can really be considered innovative in the way that the article is talking about. Certainly startups can have very creative products, but in the end they almost always apply existing technology, whereas the article is more concerned with actually advancing science, engineering, or the arts.

That's not to say that startups are unimportant, just that I don't think anyone would argue it makes sense to replace all research labs with startups. Startups are focused on making money, whereas research is focused with progress in human knowledge.

Re: American Innovation Lies on Weak Foundation?

#13

Post by sandworm101 »

Funding for pure science is a function of american politics. The problem isn't in budgets or even politicians. The people with the money/power have lost respect for science. Some feel that scientists have an agenda, others that they are simply untrustworthy, and a large percentage see science as a challenge to belief systems. Those views are the real root.

The desire to cut science funding does not come from rational deliberation. So the path to greater investment in science is not through rational debate. The only real path, and it is a long one, is to bring people on board through proper science education.

Re: American Innovation Lies on Weak Foundation?

#15

Post by [deleted] »

paulpauper wrote: post #3

The iPhone in your pocket has more computing power than the Voyager spacecraft that left the solar system two years ago Sigh..people who use this example don't understand engineering. The Voyager doesn't need much power to do its job. An iPhone needs a lot of power to surf the web and play videos. An iphone also has more computing power than a Casio watch that you can buy a Walmart, because the watch doesn't need muc…

[deleted]

Re: American Innovation Lies on Weak Foundation?

#16

Post by GFK_of_xmaspast »

paulpauper wrote: post #3

The iPhone in your pocket has more computing power than the Voyager spacecraft that left the solar system two years ago Sigh..people who use this example don't understand engineering. The Voyager doesn't need much power to do its job. An iPhone needs a lot of power to surf the web and play videos. An iphone also has more computing power than a Casio watch that you can buy a Walmart, because the watch doesn't need muc…

Voyager needed computational chops to do things like error correction and starfinding and etc, I suspect that NASA stuffed as much cpu in there as they could get away with, considering the whole 'radiation' thing.

Re: American Innovation Lies on Weak Foundation?

#17

Post by hugh4 »

WalterBright wrote: post #11

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

>I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it.

The sorts of people who invest in Amazon are, anyway.

Still, it's true. Growth companies think long term. But the moment a company (or other organisation) gets into trouble it starts thinking short term. When you've got to lay off 20% of your workforce, you pick the ones whose absence won't be felt for many years.

But really, the reason that companies don't invest in pure science is not that the value is too far in the future but that the value is too diffuse to capture.

Re: American Innovation Lies on Weak Foundation?

#18

Post by username223 »

WalterBright wrote: post #11

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

So high P/E is evidence of a "long game," and traders operate based on their best estimate of companies' fundamentals? What are you buying, because I'd like to short it.

Re: American Innovation Lies on Weak Foundation?

#19

Post by WalterBright »

hugh4 wrote: post #17
WalterBright wrote: post #11

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

>I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The sorts of people who invest in Amazon are, anyway. Still, it's true. Growth companies think long term. But the moment a company (or other organisation) gets into trouble it starts thinking short term. When you'…

I've seen what happens to companies that think short term. They think they're fooling the investors, and some of them manage it for a while (Enron). But when the investors do get wise, the stock tanks, every time.

If you are better than other investors at knowing which companies are secretly eating their seed corn, you can make a fortune shorting their stocks.

CEO compensation is often tied to short term stock values. But those short term stock values ARE a reflection of the long term prospects of those values, not last quarter's profit. I've seen a lot of share prices tank when a blowout profit was announced, because along with it investors got hints that there were big problems looming.

Re: American Innovation Lies on Weak Foundation?

#20

Post by WalterBright »

username223 wrote: post #18
WalterBright wrote: post #11

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

So high P/E is evidence of a "long game," and traders operate based on their best estimate of companies' fundamentals? What are you buying, because I'd like to short it.

I've had AMZN since its IPO. AMZN has regularly crushed the short investors for 20 years now.
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