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Layoffs Don't Work

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Re: Layoffs Don't Work

#101

Post by gruez »

mhog_hn wrote: post #68
kibwen wrote: post #58

Earlier quoted context omitted.

The stock market is just a predictions market, and any predictions market at scale destroys the subject of its prediction.

What is the long term effect on accuracy when a large mass simply moves XX% of their monthly paycheck into top ETFs? I don’t disagree with what you said though, simply sharing thoughts - I think it leads to markets being more sensitive to macro strategies rather than actual fundamentals

>What is the long term effect on accuracy when a large mass simply moves XX% of their monthly paycheck into top ETFs?

Such investments are typically market cap weighted, which means their effect on stock prices are neutral. Moreover there's still room for hedge funds (and other sophisticated) investors to engage in price discovery.

Re: Layoffs Don't Work

#102

Post by sumeno »

alphazard wrote: post #98

There is a theory about large complex systems which seems to be true in biology and maybe applies here. Intentional downsizing during times of stress works when it preferentially targets defective or dysfunctional components of the larger system. The system improves because the worst parts were removed. Layoffs don't help companies unless they can reliably remove the worst parts. At most large public companies, the c…

Twitter was profitable before the takeover and now it is not

Re: Layoffs Don't Work

#103

Post by bdangubic »

alphazard wrote: post #98

There is a theory about large complex systems which seems to be true in biology and maybe applies here. Intentional downsizing during times of stress works when it preferentially targets defective or dysfunctional components of the larger system. The system improves because the worst parts were removed. Layoffs don't help companies unless they can reliably remove the worst parts. At most large public companies, the c…

twitter is just about the worst example you could have used - by wide margin…

Re: Layoffs Don't Work

#104

Post by echoangle »

malfist wrote: post #33
fzeroracer wrote: post #18

Earlier quoted context omitted.

Running a business is less and less about actual business outcomes and more about juicing stock. And the stock market itself is divorced from reality as companies whose output has gone down over time sees higher valuations because the owner has cult appeal. So everything gets worse and more expensive year over year while feckless suits get sloshed over company dinners.

The stock market is like a sports betting pool where the players are allowed to bet on themselves

> where the players are allowed to bet on themselves

Wouldn't that be insider trading? You can't short your own company before announcing bad things to make money from it.

Re: Layoffs Don't Work

#105

Post by gruez »

nthingtohide wrote: post #91
kibwen wrote: post #58

Earlier quoted context omitted.

The stock market is just a predictions market, and any predictions market at scale destroys the subject of its prediction.

Can we have a different kind of stock market which forces participants to consider long term outcomes more? E.g. no HFT firm should be able to make a profit from such a stock market. Selling stocks earlier and often should result in a penalty or percentage being taken away as a fee. As a retail investor I would love to use invest and forget strategy based on trends observed in such a stock market.

>E.g. no HFT firm should be able to make a profit from such a stock market. Selling stocks earlier and often should result in a penalty or percentage being taken away as a fee.

Maybe by "HFT" you only mean "those evil hedge funds that are pushing companies to chase next quarters' earnings", but there's nothing fundamentally wrong with high frequency trading. Market making[1] is high frequency trading, and basically involves offering to both buy and sell and given stock, and pocketing the spread. That increases liquidity, making it easier for other traders to buy/sell stock without taking a huge loss. It's unclear why you'd want to ban this, or how you'd distinguish this from whatever evil HFT you actually want to ban.

[1] https://en.wikipedia.org/wiki/Market_maker

Re: Layoffs Don't Work

#106

Post by gruez »

altcognito wrote: post #81
mattmaroon wrote: post #59

"After the early-2000s dotcom bust, Bain researchers found that stock prices for S&P 500 companies that had no layoffs or laid off less than 3% of their workforce increased an average of 9% in the next year." Do non-science journalists just not know about correlation vs causation? Does it really not occur to them that maybe the companies that didn't do layoffs were healthier and that's why they overperformed? Wouldn'…

How would you correct for it? As someone who works with ten year olds, they would ask you what causation and correlation is.

They might not know those words, but intuitively know that stuff like "ice cream trucks cause heat waves" make no sense.

Re: Layoffs Don't Work

#107

Post by [deleted] »

lukashoff wrote: post #40

Because layoffs are not done to make company great but to make sure shareholders and execs preserve their wealth. It's never about company or people or technology - it's always about money, power and wealth.

[deleted]

Re: Layoffs Don't Work

#108

Post by mattmaroon »

altcognito wrote: post #81
mattmaroon wrote: post #59

"After the early-2000s dotcom bust, Bain researchers found that stock prices for S&P 500 companies that had no layoffs or laid off less than 3% of their workforce increased an average of 9% in the next year." Do non-science journalists just not know about correlation vs causation? Does it really not occur to them that maybe the companies that didn't do layoffs were healthier and that's why they overperformed? Wouldn'…

How would you correct for it? As someone who works with ten year olds, they would ask you what causation and correlation is.

I was being hyperbolic about the ten year olds, but that's funny.

Correcting for it: I don't know. It would be very hard. You could try to control for variables like profitability, etc., but there are so many and you don't know what you don't know. But the correct response to absence of valid data isn't drawing conclusions from obviously bad data.

It just cracks me up that one paragraph later the author points out:

"Mass layoffs are often symptoms of unsound business strategies and don’t do anything to cure the larger problem."

and yet somehow didn't see that that sentence alone proves his previous one was pointless.

Re: Layoffs Don't Work

#110

Post by Sammi »

sejje wrote: post #49
pclmulqdq wrote: post #41

I remember hearing a take on layoffs that I think is pretty true: When you fire the bottom 10%, you lose another 10% who are from the top performers. The destruction of psychological safety for everyone at the company is irreparable, and you start to bleed your most productive talent, too.

Why do you lose 10% of your top performers?

Because disloyalty breeds disloyalty and distrust breeds distrust.

The top people have the best opportunities elsewhere, so they leave first.

Even if they don't quit outright, they are likely to quiet quit, because why put in the effort when it is rewarded with disloyalty?

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