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The Dumbest Idea In The World: Maximizing Shareholder Value

forbes.com

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Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#111

Post by mmaunder »

Another example of a company in addition to J&J and P&G that the article mentions who focuses on customers is Amazon. Bezos recently was punished via a 30% drop in Amazon stock price because he is ploughing all his net income into the Kindle Fire, even though Amazon's revenue growth is exponential and has been for a decade.

Shareholders in the public market right now are focused on "value stocks" in the Buffet and Ben Graham sense and if you don't match value stock heuristics with a dividend and growing net income, you will be punished even if you're 100% focused on creating new customers.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#112

Post by forensic »

beagle3 wrote: post #109
forensic wrote: post #100

Earlier quoted context omitted.

Jefferson is a poor source to you? Those quotes demonstrate the cache that the concept of honor had.

No. Quotes are in general a poor source, especially one line quotes which were probably taken out of context (I don't blame you for taking them out of context on purpose, but time is an important context for e.g. what "honor" actually means, as you agreed earlier on this thread). If you trust quotes - Bush said "No new taxes" (and there were), Obama said he'll close guantanamo as soon as he goes into office -- he eve…

It's overly simplistic to say people always worship the powerful. Caesar was assassinated by the entire senate. Democracy in America was created on the basis of the rejection of power-worship.

You seem to have your pet way of interpreting history. I'm not arguing that honor and other values were some kind of omnipotent force for good I'm just saying they existed.

When you assume that I'm a complete idiot you're failing to "assume good faith" which is one of the conduct requirements to maintain your honor. In a court of law, a lawyer who fails to assume good faith is dishonored and his arguments are automatically invalid. Honor is still used in our justice system.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#113

Post by forensic »

Untitled wrote: post #27
beagle3 wrote: post #20

Earlier quoted context omitted.

> Our society used to be based on concepts like honor. Nostalgia isn't what it used to be. Society was never based on honor; it was always about worshiping those who succeeded, regardless of how bad they had been, as long as they did some good at some point. see, e.g. Rockefeller, Carnegie, Mellon & Gates in recent times, and basically all fondly remembered kings and barons in earlier times. Society adapts, in part,…

> it was always about worshiping those who succeeded, regardless of how bad they had been, as long as they did some good at some point. This is extremely true! Probably the best example of this is Cecil John Roads ( http://en.wikipedia.org/wiki/Cecil_Rhodes ) who was a ruthless businessman who owned countries, started wars and engaged in unsavory business practices. Yet he is fondly remembered for the Rhodes Scholars…

This revisionist view of Rhodes is overly negative. He was an empire builder but his prime motivation was to modernize the world. Rhodesian policy led to the end of the empire, in fact. This is just overly simplistic character assassination. Rhodes was way more complicated than you make him out to be.

I remember reading one of his lectures where he was telling the class that now their duty, as wealthy and cultured modernists, was to serve the uncivilized and poor of the world and to bring the luxury and comfort that aristocrats knew to everyone. Rhodes taught altruism and service to the unfortunate and his legacy is many powerful people who worked to better the world, inspired by Rhodes.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#114

Post by ams6110 »

Andrew_Quentin wrote: post #54
tomjen3 wrote: post #44

Earlier quoted context omitted.

First I see that you are new here, so welcome. That isn't much of an argument you are presenting though -- you could argue against a person being allowed to do anything based on that. The reason I can't drive a car the way I want is that it represents a clear and present danger to the health of third-parties. On the other hand running my business the way I want doesn't present a clear harm to others, so I can't.

The BP oil spill is a clear example of dangers to others, as is the credit crash. There are numerous other examples, one given in the article itself, where the actions of business can do great damage to individuals. Is my toothpaste safe? What about my tomatoes?

The credit crash was due as much to people taking on obligations they ought not to have taken on, as it was about lenders making loans they ought not to have made.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#115

Post by WalterBright »

alexqgb wrote: post #39
yuhong wrote: post #30

Earlier quoted context omitted.

But the key thing is that Jobs did it the right way instead of meeting short-term expectations.

Exactly. Healthy profits are the (inevitable?) result of a well run business, which requires attention being paid to a variety of factors, not just the bottom line. Failing to understand this, and focusing exclusively - or even disproportionally - on the bottom line, is likely to improve it in the short run, diminish it in the medium run, and destroy it in the long run.

Take a look at the P/E values for various companies. Ones with a high P/E are clearly those where the shareholders believe there is long term growth in the profits, and are willing to forego current profits to get it.

I really do not buy into the popular idea that shareholders are only interested in short term results. If that were true, then marginally smarter investors would regularly make themselves huge fortunes by buying undervalued stocks.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#116

Post by mhartl »

philwelch wrote: post #29
mhartl wrote: post #11

There is only one valid definition of a business purpose: to create a customer. No. The one valid definition of a business purpose is this: A business should do what the owners want it to do. Otherwise, the notion of ownership loses meaning. If the owners want to create lots of customers, they do that. If they would rather have a smaller number of highly profitable customers, they do that. If they want to create a ni…

If it's really your business, and you're the one deciding what it does, and you choose what you want most from that business, then you are maximizing shareholder value, because you are the shareholder and you're maximizing the business's value in your life.

Of course you're right in a sense, but when people say "businesses should maximize shareholder value", they use "value" specifically to mean financial value.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#117

Post by stevedenning »

sless wrote: post #98
stevedenning wrote: post #58

Earlier quoted context omitted.

Interesting? Yes hopefully. Plagiarism is "the unauthorized use or close imitation of the language and thoughts of another author and the representation of them as one's own original work." By definition, one can't plagiarize one's own writing. In the 1000+pages of stuff on the blog, it's true that some important ideas are emphasized more than once.

No, it is plagiarism. It is a blatant copy of Arthur Schopenhauer, "All truth passes through three stages: First, it is ridiculed; Second, it is violently opposed; and Third, it is accepted as self-evident."

Thanks for the reference. I've added a note..

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#118

Post by beagle3 »

forensic wrote: post #112
beagle3 wrote: post #109

Earlier quoted context omitted.

No. Quotes are in general a poor source, especially one line quotes which were probably taken out of context (I don't blame you for taking them out of context on purpose, but time is an important context for e.g. what "honor" actually means, as you agreed earlier on this thread). If you trust quotes - Bush said "No new taxes" (and there were), Obama said he'll close guantanamo as soon as he goes into office -- he eve…

It's overly simplistic to say people always worship the powerful. Caesar was assassinated by the entire senate. Democracy in America was created on the basis of the rejection of power-worship. You seem to have your pet way of interpreting history. I'm not arguing that honor and other values were some kind of omnipotent force for good I'm just saying they existed. When you assume that I'm a complete idiot you're faili…

Funny !

When was the last time you observed real court proceedings and saw a laywer dishonored? Many of them act in bad faith every day.

You ignore historical examples dismissing them with excuses, your references are (essentially) PR speeches and the conservapedia (this thread http://www.halflife2.net/forums/showthread.php?121000-Conser...! might enlighten other readers, but it is irrelevant to reality in your own planet).

If courts worked as you believe, the SCO/Novell fiasco would not have dragged for the years it has (it's still not dead!).

Yes, honor exists. But you have failed to demonstrate that the course of american society was significantly influenced by the concept of honor.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#119

Post by nazgulnarsil »

1gor wrote: post #22

The statement 'maximizing shareholders value' is meaningless without the timeframe. The correct phrasing is to 'maximize shareholders value in the long term '. The 'long term' bit is crucial, and it is not reflected in today's management incentives. The choice that managers of public companies are facing is the well known "Consume vs. Invest". Or, in the terms of an evolutionary fitness landscape, "Exploit vs. explor…

shareholder investment window is up to the shareholders. if shareholders push for short term profits at the expense of long term stability that is FINE. In a healthy market they get eaten. We have an unhealthy market where some get to maximize short term profit and then go crying to mommy when the consequences roll in.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#120

Post by LearnYouALisp »

beagle3 wrote: post #97
LearnYouALisp wrote: post #92

Earlier quoted context omitted.

By "our society", American society is meant, and what was said is true. It would be ignorant of history to say that this country's laws and founding documents did not draw much inspiration from the Bible.

The Bible ("Old Testament") ... in which King David does the most dishonorable thing possible, sends a man to die in war so he can have that man's wife -- and gets endless praise regardless? No wonder. Regardless of the inspiration, reality with its liberal bias favors the successful rather than the honorable. These concepts are not inherently incompatible, but way more often than not are, and always were.

Regardless of whether man praises something or not, the Bible condemns what is unrighteous and praises what is righteous. However, it also shows that God hates the sin but loves the sinner (see John 3:16).

Yes, the king himself committed adultery and murder. After this, David was rebuked by the prophet Nathan with the word of Jehovah (2 Samuel 12:1-14). You see, God immediately condemned what David did. Then He spoke a judgment on David and on his house (Israel): "Now therefore the sword will not depart from your house forever because you have despised Me and have taken the wife of Uriah the Hittite to be your wife." (v. 10) The sword, that is, war, has not left the nation of Israel. They are constantly fighting for their survival. David was even personally disciplined by his son dying and his wives being treated as he had treated Uriah's wife (vv. 11-14).

After being rebuked, David mourned. At this time, he wrote Psalm 51. In it he repents and confesses his sins to God, saying, "blot out my transgressions", "wash me thoroughly from my iniquity", "from my sin cleanse me", and "purge my sin". Eventually, David's repentance and confession joined God's forgiveness and the result was Solomon, through whom the temple was built and Christ was produced.

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