Uncommon Sense

May 20, 2014

Tail Trying to Wag Financial Dog . . . Again

The Anglo-Swedish drug company AstraZeneca has rejected the £69,ooo,ooo,ooo takeover bid of U.S. rival Pfizer. You would think that would be the end of things, but no. AstraZeneca shareholders are up in arms over the rejection of the deal.

Do the shareholders know the intricate details of the deal? No.

Do the shareholders know whether the deal will be good for AstraZeneca’s brand? No.

Do the shareholders know what the firm’s management’s full thinking was? No.

So, what did the shareholders know?

They knew that they would have made a major profit on the value of their shares.

So, as far as they are concerned, any deal that makes them money is a good deal? Or are they believers in the lie that the only reason for the existence of a corporation is to create value for its shareholders?

Whatever the case, it is extremely bad management on somebody’s part whenever the shareholders decide they want to run things. In this case it seems to be bad management on the part of the shareholders.

Ah, the stock market. Why do we still think this is a proper way for business to take place?

November 8, 2013

Such Interest, Such Brio, Such . . . Speculation

Proving once again that the heart of the stock market is not a financial system underwriting solid businesses in their attempts to grow, Twitter shares in their debut on the New York Stock Exchange yesterday got as high as $50 per share from an opening price of $26 a share, before closing at $45. This was on a day when financial markets overall sank, proving that investors were excited about the micro-blogging site’s first ever stock offering.

Oh, and Twitter lost $65,000,000 last quarter.

And, you remember, the even larger Facebook offering was met with the same exuberance, followed by round after round of buyer remorse.

I thought the federal government outlawed gambling sites.

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