A good manager, regardless of whether one is talking about the telecom, the pharmaceutical or the personal care industry, is a manager that looks after the short term, but focuses on the long run.
Every manager has to deal with day to day pressures from the business, the investors as well as internal “socio-economic” demands. The successful manager accumulates all these challenges into a well balanced portfolio usurping the heat, energy and tension that comes with every successive challenge, and refocusing, like judo, the combined incoming energy towards constructive results.
Many times managers' careers are determined by short term expectations rather than long term results. This means that a manager the works hard for the long term may loose out to one that promises short term results with all the added embellishments; many times this expectation leads to promotions of yet unproven individuals with questionable competence.
Markets frequently work in the same way. For example one would expect that the value of a well managed company, whose sales are increasing even in these dismal times, would be reflected in the positive change of the corporation’s share value.
And therein lays the paradox:
S&P 500 Share Prices for 2009
A survey that was done by Bloomberg for 2009 on the S&P 500 concluded that a number of well managed companies, like Johnson and Johnson and Brown Forman, that succeeded in above average sales and which soundly invested their capital, had a less than 10% increased sales value.
Bloomberg notes that in 2009 less than 200 from the S&P 500 list of companies with a decent ROI experienced an increased share value. This lackluster performance was tied to the limited investment interest of major capital investors to consider the stock are part of their overall portfolio.
Wall Street Investors Prefer Lacklustre Performance
On the other hand, companies that faired less than well experienced the largest increase in share value.
Crediti Andorra reported that 2009 marked a turn in investor’s preferences towards financially troubled companies, buying bulk stock at discount prices while ignoring well managed financially sound and robust companies. There are many reasons for this including share impacts from the expected FED strategy and US government company bail out decisions, but the buy low sell high syndrome seems to dominate the minds of these wall street investors.
Short Term Decisions Blur Long Term Investment
On the other hand these actions may blur out companies that can be regarded as a sound investment alternative for the long term, companies that can provide a good stable low risk return, and a viable option to fixed term savings accounts. It should be noted that the American economy in 2009 experienced the worst economic slowdown since 1930.
Finally, Bloomberg reports that in 2009 two thirds of the S&P500 companies reflected stable sales (or at least a decrease of less than the average of 6%).
Antonis Hontzeas - Antonis Hontzeas has been in the forefront of the Telecommunications industry for over twenty years. Tenures include positions ranging ...
Join the Conversation