Quote:
Originally Posted by CoachKandSportsguy
Boomer!
You are describing corporatism, where the corporation and its stock price come first!
Corporatism is more inefficient as you get towards the mgmt top because the egos lose rational thought and spend shareholder money for their interests, even non buybacks investments start to get self centered as the best for them vs the company
Its the sign of advanced economic financialization of the world, where all that matters are dollars and return stories and shareholder spin.
For the rest of the people who miss Boomer's point completely, just focusing on the cause of either brakes, (not breaks) or bearings (not barings) , the $10 billion of cash being spend on stock should be spent on better maintenance, upgrading brakes to stop faster, replacement cars for old worn out cars, more track inspections and repairs, etc
Just like UHC thinking that insurance company's can't lose money anywhere, and must grow profits by becoming a near monopoly negotiating lower and lower rates for higher profits and bonuses. human greed has been known to wreck nice situations. . .
I have friends who are in accounting and finance in very large companies, in different industries, who have seen corporatism in many ways, and seen people go to the pokey for same, and it just keeps happening. The power ascent occurs in business as well as politics, where ever the perceived power and influence. Jack Welsh was one of the big influences and trend starters, and working with former GE executives, you can see who worshipped Jack and were Jack wannabes, and who hated Jack, there are few in between. .
future former finance guy
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Thank you future former finance guy
for expanding on my point -- and for adding a new word 'corporatism' to my vocabulary.
Ah, yes, "Neutron Jack" -- I heard a lot about him during his reign at GE because I know people who worked there. Welch ran GE from 1981 to 2001 and eventually pretty much eviscerated the company.......
It was never enough for Welch to stick to jet engines, locomotives, light bulbs, appliances -- all the stuff that had built the company into one of those stocks that let shareholders sleep at night......
But Welch's narcissistic personality drove his unrestrained greed. One of the things he did was position GE in finance. He could see the rah-rah of finance and wanted a piece of the action. He left GE, not long before the financial crisis. He took a record-breaking 417 million severance with him, as he left GE cruising for a fall. And fall it did. Never to be the same.
During Welch's tenure at GE, he had a practice of ranking employees and automatically firing the bottom 10%.
I am from Cincinnati and for decades, if you had a job at P&G which is headquartered in Cincy or at GE, you were well set.
P&G is still moving along, not the most exciting stock, but PG has paid a dividend since 1890 and has increased its dividend for 66 consecutive years. (PG usually announces the increase in April and starts paying at that amount with the May dividend.) PG has been known for its profit-sharing. I don't know if it's what they do anymore, but for many, many years, employees got stock -- and many of PG's retirees have held those long accumulated shares for decades -- for the dependable dividend. I cannot even begin to figure out what the actual dividend yield is on a share of PG held for 50-plus years, through ups and downs and split after split, consistently belching out those increasing dividends.
Long term dividend investing is often misunderstood. People look at the current yield, which is 2.60% for PG at this moment for an annual $3.65 per share check-in-the-mail. But if that share is decades old, the math to see the actual percentage for yield, when figured on cost basis of a really old share, makes some interesting, simple math.
Of course, there is no such thing now as a job for life and company loyalty. A few years ago, P&G streamlined back to their most profitable products. And PG has done stock buybacks, just like all the rest.
But having lived most of my life in a town where P&G and GE were both once THE places to work, and knowing many people who worked for either, I have up-close and personally seen how each of those company's employees and shareholders feel about what is happening or has happened to them.
There is a recent book about Jack Welch. The title is
The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America -- and How to Undo His Legacy. (I have not read it. I just heard about it. That long title says a whole lot.)
Again, thank you for picking up on the point I was trying to make. When acknowledging the influence of behavioral economics when choosing investments, the behavior of the CEO should be taken into consideration. All CEOs are not created equal.
I remain needing directions to the vomitorium as I see that CEO of Norfolk Southern spew the company line in the faces of people whose lives have been changed forever. Those who side with him and spew their own broad statements, I guess must think the taxpayers should pick up the bill on this one.
(I have just written a whole lot of words, this morning, and I have lots of things to do in my real life and I need to get out of here.. . .and I hesitate to write this next sentence because I do not want this to turn political. . . But I must say that I keep (probably naively) hoping that the two senators from Ohio will reach across the aisle to join and lead forces to take care of the people of East Palestine. I keep hoping this is Ohio's moment to be an example for what this country needs -- getting back to the people.)
Boomer