Can you stop stretching out your words. Your content is good but your speaking style is obnoxious. “Amerikhah,””shareholdoor vahleeyooouh,”findehet,” companeeyh, emploeeeeyaeh,” “eeligahleeeyeah.”It sounds like you’re jizzing while talking.
you forgot to say that this idea has stay relevant because of state intervention, so the state and its evil hitmen AKA lawyers are the main reason because they are also scrapping pennies in front of a steamroller, they want to prevent people going batshit crazy.
Norfolk Southern approved a $10 billion share buyback program and a 9% dividend increase just before they told their employees that they couldn't afford to give them any sick days and 10 months before they had a giant accident that poisoned a whole town because they wouldn't invest in maintenance and pursued understaffing to save money.
Those same employees will be retiring at some point with a 401k that is funded by businesses that do the exact same thing. A lot of people demonize looking out for shareholders until they see their retirement portfolio underperform.
@@badluck5647 Capitalism makes people complicit with the exploitative relationship by making owning stock, real estate, bonds, and other financial assets as one of the few ways to be secure in their older years or when they fall too ill to work. A deceptive part of capitalism is that allows people to own equity on a market basis unlike feudalism but it is in such vast inequality and alienation that the Bossism and Landlordism starts to look a lot like a form of neo- (commercialized) feudalism.
@@rogerbartlet5720 I did some research... And you're right. $1Billion in corporate bonds! "New issues: Issuer Norfolk Southern Corp released international bonds (US655844CM86, US655844CN69) in the amount of USD 600, USD 400 mln maturing in 2032, 2053 respectively. February 17, 2022 Cbonds On February 15, 2022 issuer Norfolk Southern Corp released international bonds (US655844CM86, US655844CN69). • In the amount of USD 600 mln with the coupon rate of 3% maturing in 2032. The issues were sold at the price of 99.999% at par. The bookrunners of the placement were Citigroup, Goldman Sachs, U.S. Bancorp. • In the amount of USD 400 mln with the coupon rate of 3.7% maturing in 2053. The issues were sold at the price of 99.412% at par. The bookrunners of the placement were Citigroup, Goldman Sachs, U.S. Bancorp." - CBonds
@@rogerbartlet5720 I did some research and you're right, $1 BILLION in corporate bonds!!! "On February 15, 2022 issuer Norfolk Southern Corp released international bonds (US655844CM86, US655844CN69). • In the amount of USD 600 mln with the coupon rate of 3% maturing in 2032. The issues were sold at the price of 99.999% at par. The bookrunners of the placement were Citigroup, Goldman Sachs, U.S. Bancorp. • In the amount of USD 400 mln with the coupon rate of 3.7% maturing in 2053. The issues were sold at the price of 99.412% at par. The bookrunners of the placement were Citigroup, Goldman Sachs, U.S. Bancorp." - CBonds
I never knew what was itching my brain about a CEO's conflict of interests within their own company until now - most of them didn't build their companies, and they have NO incentive to see it's survival past their tenure. Long-term planning and sound business strategy are things of the past.
You can keep all the bonuses even if the whole company collapses catastrophically into burning pile of garbage as long as you cashed your bonuses out in time
@andybunn5780 The big deal is that there are consequences to this and you can only kick the can so far. When the can finally reaches the end of the road the consequences are catastrophic, and the solutions that could have been implemented to actually solve the problem three blocks prior will no longer work.
I've lived this. Worked for a fortune 500 company that every single quarter results were about 1 minute of congrats for beating expectations and 59 minutes of all the things we need to do better. It seemed unsustainable to constantly do more and more in a saturated market, working for a mature company. I would always sit back and wonder why isn't it enough to just have a profitable business, with steady revenues. Instead, everyone was miserable, expectations were off the charts, work/life balance was non-existent and layoffs always a looming threat.
Because this is how company's create a culture of performance by not increasing pay. Just increase stress and anxiety and you will increase performance, it's a new fad and you will only see this get worse.
I just moved to a company like this. Best expectations by a wide margin? Great, now increase that by 20% next year! I'm not sure what the plan is for when there's an inevitable downturn...
And this is why I'm glad I work for a company that's not publicly traded. The leadership makes business decisions based upon actual business value, not raw greed, and we, the employees, actually get treated well as a result. I'll most likely stay where I am until I retire.
Got my MBA. Teacher walks in and says, "This week is information I'm required to teach you. It's the dumbest thing you will ever hear and it was proven false in the 60's. First, Stockholder Wealth Maximization"
its sad that I had a feeling the way businesses were run today made little sense and this was back in Highschool where I took a business pathway. Stockholder Wealth Maximization sounds like to me. "How can I get as close to a gilded age robber Barron as possible"
@@kappadarwin9476 When I was in high school, we were barely taught about how businesses run - only to finish high school, graduate college, and go to work for them...
@@go_better it's still a very valuable degree that teaches much of what you wouldn't learn in the field unless being taught by someone else with an MBA. You just got to vet the college and teachers before you go. Just because it's a big name doesn't mean it teaches reality.
When I was getting my business degree it was more like a Jack Welch worship session. Jack Welch was the Messiah who could do no wrong. I felt stupid because I thought the whole thing was wrong and I was simply too much of a pleb to ever understand the 4D chess CEOs play.
I had a colleague who was useless at her job. Got a big promotion to a new job and couldn't understand how. Found out the new employer had an internal auditor who found loads of issues. That auditor was let go and my friend, who they knew wasn't competent enough to find the big issues, got hired!
Probably because it’s easier to raise poor performance than high performance. But don’t worry, the incompetent worker won’t be the one raising performance. You’ll be doing it for them.
My knee-jerk reaction is "she was promoted for her diversity." DEI has made it next to impossible for companies to obtain financing without performing equity theater and showing banks they're promoting appearances over real talent. My 2nd knee-jerk reaction is, who's she sleeping with 😂 But maybe I'm just jaded.
@@IcicleFerretyou might feel more comfortable on ben Shapiros RUclips channel. Where they blamed the door flying off an airplane on DEI. If you're going to stick around, don't repeat racist agitprop.
The CEO's dream is to make one reckless decision after another until your company reaches "too big to fail" status, at which point your terrible decisions will no longer have consequences because you can just hold the entire economy hostage and force the government to bail you out over and over again.
Boeing cutting down on safety controls and testing is the thing that pisses me off the most. These psychos have literally decided that their returns are worth more than the safety and lives of their machines passengers. Literally criminal behavior. I think that all happened after the change from an Engineering-Educated CEO to an MBA CEO with little no engineering experience? Like, wtf is such a move even legal in a field that is usually pretty brutal when it comes to safety? Not to say that all MBA CEOs are necessarily bad or evil, but the one responsible surely was.
Dennis Muilenberg was actually an Engineer by trade before becoming CEO (and resigning because of the 737 MAX crashes). But the larger point still stands that even people who should know better will still knuckle under when their pressure and incentives are pushing them in the wrong direction
@@Erohlson Ah that's a good insight to have. One wonders how "having planes crash" does "increase shareholder value". It appears that the exact opposite is the case, considering the image problems Boeing now faces. Seems...extremely short sighted, almost to the point of blindness.
Exxon Valdez taught us it's cheaper for companies to drag things out in court with lawyers on the payroll for decades than avoid the problem in the first place or pay damages, until almost all of those affected have all died and they only have to settle with a few parties.
@@fortyfourandgore9787 Holy I didn't know about Exxon Valdez (it was a bit before my time). "Investigators later learned that Joseph Hazelwood, the captain of Exxon Valdez, had been drinking at the time and had allowed an unlicensed third mate to steer the massive ship. In March 1990, Hazelwood was acquitted of felony charges. He was convicted of a single charge of misdemeanor negligence, fined $50,000, and ordered to perform 1,000 hours of community service." Those must've been some darn good and soulless lawyers...
@TheFriendOfLucifer I don’t think it’s that they see having plane crashes as increasing shareholder value, but rather they see spending on improving safety as decreasing shareholder value. There’s also the hopium of thinking that it’s an isolated incident until reality shows that it’s not. The ‘small government’ cheerleaders simply want to remove legislation that legally binds them to do the right thing because doing the right thing has costs. Safety legislation in particular gets put in place as a result of companies not doing the right thing on their own in the first place.
Jack Welch is a perfect case study in someone who essentially ran a ponzi scheme with shareholder value. Made the line go up long rnough to cash out, then left the place to burn.
@@annibhardwaj6914 The man ran General Electric like a financial firm. He would essentially make predictions for how GE would perform each year and quarter, then buy and sell companies to match the numbers he chose. This made GE seem like a more reliable stock, when in reality Jack’s business strategy for each new company was to simply maximise profits by mass layoffs and cutting projects. This approach was fundamentally unstable and ultimately led to the collapse of GE, but by then he’d already made his money and jumped ship, leaving the company to burn.
@@annibhardwaj6914 Jack Welch effectively chopped off parts of GE and fed them to the shareholders. The shareholders seemingly didn't clue in that not reinvesting the savings from layoffs and proceeds from sales of assets means the business does not increase in real value.
@annibhardwaj6914 Jack Welch used a lot of creative accounting, and essentially stated that if GE wasn't either the number 1 or 2 player in a product market, they would sell off that product or division. So on paper, it looked like they were more profitable, and yet shrank over his tenure. Before Jack, GE was a leading engineering firm in almost every product market using electricity. When Jack came onboard, most of the products either were rebadged products from other suppliers in Asia, which were lower quality at the time, or completely sold off to other companies. Meanwhile, he would sell off entire divisions and plow that money into financial services and industries that GE didn't have a foothold or history in (see GE's purchase of NBC).
@@caseyroberts1171 This exact same thing is happening to several major videogame companies, and i do mean *the exact thing you're describing*. Isn't it so convenient that these people never see the amount of potential profit they throw away by shutting down any division which isn't actively overperforming? Wonder how long it'll take for the business world to wisen up to this (if they ever do), since the governments of the world sure don't seem like they'll intervene in any of this behavior in any way anytime soon.
I've been telling myself this for months now: everything's going to shit because the economy is run by people who would set their house on fire to warm themselves up in winter
That shareholder first mentality was what broke IBM. The company executives strived to reach very high EPS goals to the point of starving the company from talent, investments in R&D and building new products. Eventually their products became obsolete and irrelevant and couldn’t remotely compete against modern cloud services from Amazon and Microsoft.
The same IBM that did over $60bn gross revenue and over $7.5bn net income (more than 4x YoY growth) last year? They seem to be doing pretty okay? They’re not the giant they were in the 80s, sure, but they aren’t spiralling the drain either and haven’t been so for years.
@@TAP7a They're still relevant in the mainframe industry, but nothing else pretty much. That's the point. They used to be supreme authorities in IT. That's not the case anymore.
All large companies are seeing one major seldom mentioned shortcoming of "shareholder value" now, the skills shortage. Looking at job listings in my area, everything is either entry level or senior positions. Nothing in the middle. Companies aren't loyal to the employees, so in turn the employees aren't loyal to the companies. So no one is with a company long enough to develop and refine the skills needed to perform at a senior level. And no one wants to hire and train for mid-level work when they can just lean hard on their senior employees and let the expectation of incompetence fill in the rest. Industries like telecom, railroads, and construction are in for a major hurt.
I would say that remote work and IT has also hit all other sectors, people have started to think, why would I risk my life or my back or legs if I can get more money doing....whatever... on my PC. I feel an impending doom to the way of life of the mid 20th and beginning of 21st centuries. Almost as if we are on the edge of technological greatness or societal decadence and a new dark age. You cannot keep wages stagnant yet productivity went up 2X, at some point that excess productivity will either disappear or will have to be transferred to the people creating it.
@WetPig True. People aren't going to transition from WFH to railroad or telecom work unless the pay is much higher. And for some reason most WFH jobs pay more right now.
Company loyalty is a 2-way street. If employees aren't loyal and will quit my hypothetical company to work for my hypothetical competition, or even use the training I paid for to start a new rival competitor, because that change offers better benefits to them, then that disincentivises me from investing long-term in my employees for the sake of loyalty. Loyalty is no reason to stay anywhere, if you the hypothetical employee can do better elsewhere.
@@rightwingsafetysquad9872 Not sure I agree with that. Day laborers have always been a thing since antiquity. Only a very small percentage of ever experienced employment security, and assurance of having a paying job was a huge motivator behind learning a trade: For example, everyone needs shoes, so if one learns to make shoes, one can always earn a living. One of the driving forces behind the theory if scientific management on the 1890's was to create work standards for any person to be able to come in, follow a list of instructions, and do a job well. Companies often found that labor was unreliable: employees missed work, moved, or were unskilled. They needed to make sure they could still function, and function at a reliable standard, without having to rely on any one individual.
My dad told me running a company is like running a marathon. You gotta keep moving at a good pace and avoid tripping on small stuff. And the runners who only care about appeasing shareholders at every move are like people who cut off thier arms mid race. Yeah, you lowered your weight meaning you can now run faster but you will bleed out either after you crossed the finish line or before crossing.
Except the CEOs that are "cutting off their arms" aren't the ones who have to finish the race. They hand it over to someone else mid way and it's now their problem.
More like the coach cutting the runners arms off and then getting offered a highly prestigious position at another college, just because his runner is currently in the lead in the marathon, which he takes and aways away from the current program before the runner bleeds out and collapses. Maybe they manage to limp across the line and survive, but they're still crippled.
I work in cybersecurity, and that statement is very true. When I started 15 years ago, small companies had teams of 10 to 15. Nowadays, large companies have 2 to 3 people on staff, and literally do not have the time to complete all the security issues.
Since the german federal railway (Deutsche Bahn) was privatized in the 90s, they have done this a lot. They let their infrastructure rot, because their contract makes the state come up for replacments, but they would have to pay repairs themselves. So now, 30 years later, the infrastrucutre is garbage and will take something like 60 billion euros to fix. Sacrificed short term cot savings for long term productiviy.
And when it dies, the stockholders will simply invest elsewhere. If government attempts to revive it, the propaganda machine will sow rage about taxpayer money being spent, because that money is to be siphoned into corporate pockets.
Same with all the public infrastructure in the UK. Now we even get to drink our own p*ss because the water companies flush raw sewage into the water supply. Real nice.
Privatized or you mean public private partnership? Only country to still have completely privatized railways is japan. No other country completely privatises railways.
It's not proper boomer mentality to slam the door behind him unless he ALSO complains that they don't want to work into leadership roles anymore. It needs a vicious level of unaware irony to be properly boomer. Not that I doubt Jack Welch has that too.
People like that constantly talk about they were “self-made” completely neglecting the hundreds of people and institutions that helped them along the way
This mentality is why layoffs are probably going to become more and more common than what we’ve been seeing. It’s the epitome of enshitification: provides a large, short-term gain that you can ride the effects of for at least a year before the problems it created are fully evident. You can maybe juice another year out of it if you can blame the remaining employees or use the family card to get them to work harder.
@@aslamnurfikri7640 I dont trust a single big investor to have anyone’s self interest in mind when it comes to AI. AI could be used for so much good potentially but not in this current work climate
Worked for a few companies that thought that they were going to fire to profitability. Every time they did it, 6 months later they're re-hiring as stressed, distrustful and angry employees were packing their bags and work wasn't getting done. Cue the company rehiring, the shareholders get mad and demand higher profits, and the company lays everyone off again. It's getting so damn tiring, especially after getting caught in yet another layoff.
@@aslamnurfikri7640 Quite the opposite actually. AI sucks. And cant replace anyone yet (or ever, until we get to like human-like level intelligence, not fancy excel document). And also requires a lot of humans to keep it operational, stable and doing useful work (because in the end whatever AI is doing would have to be finished and VERIFIED by human).
Having a career in cybersecurity and related risk management, it is true that we're never praised for blocking/deterring attempts and always blamed for information incidents.
Get a good management team in place that can advertise your wins! I also work in IT (not specifically security, but what part of IT doesn't touch on security now?), and when management started explaining what almost happened and what we prevented or mitigated before it was a problem, and the weird hours we work to run fixes after hours while providing support for things during normal people's work day... Let's just say the embarrassment of being highlighted is a price worth paying for the grace we get when things don't go perfectly. It's a night and day difference in work culture, and made the board happier to give us more funding for better tools to make our lives easier. If your IT manager isn't also an IT evangelist, then they are a bad manager.
Dude way too often companies try to push back on everything on the cybersecurity side and drag their feet on funding their cybersecurity. The CEO will say they care about cybersecurity and data privacy/protection but often times internally companies do not care until they have lost a LOT of money because of a breach. Internal IT departments (if IT hasn't been outsourced) usually want to follow industry best practices if they can but they often do not have the C-suite and budgetary support to do so.
The short term thinking of shareholders is very real. I remember several years ago reading that Bezos having Amazon invest in it's own trucks rather than outsourcing all their delieveries to other companies and a lot of shareholders were extremely upset by this because they wanted more dividends. Couldn't believe how short sighted that was.
I remember so many people being baffled by Amazon "not making money" for so long, yet here we are where they are every other truck on the highway and every other delivery van. And all so people can buy cheap consumer goods from China. Hmm...not sure seeing long term is great either...
@@johnchedsey1306 Yeah, chinese future is kinda screwed. "Wonder" (investors money) is running out, country build to cash out for a decade or two and then use money to rebuild what they had broken has no money to do so, and now escalation with major buyers... I bet india/mexico is next.
@@johnchedsey1306 That the goods are made in China isn't down to Amazon though. We don't have Amazon locally, but if I pick up any random product in any shop there is a high probability it will say Made in China on it. China is a capitalist dream as far as labour is concerned. It has labour laws like those that used to exist in developed countries where workers had low pay and no rights. It's actually funny that people think China is in any way communist. If it were the workers would own and control the factories.
Amazon, Tesla, SpaceX, and some others are good examples of what happens when a smart CEO plays the long game. People will hate them and that’s normal, but in the end they come out on top once their competition’s burned itself out with their short-term plans.
Currently getting my MBA and all our classes are pushing us to focus on long term goals and encouraging innovation. They seem to be teaching us to do the opposite of what these disastrous businesses have done. So that's one good thing happening now.
Maybe at your school it's like that, and I'm glad it is. But definitely not like that at all schools, I'm sure many schools continue to teach what will continue to feed the machine
In a university business class in which groups manage a fake company. Guess what we are graded on? Ending stock price. We are being taught to maximize shareholder value in school, how do we expect future CEO’s to perform differently
Except irl there is no end date which you will receive a grade the company will continue on forever not just 2-3 years and long term thinking can be more profitable overall
So many people missed the point here, which is that reinvesting profits back into the business made for better results, better jobs, better quality, better overall profits, and actual stability. That was the model that made the US and its middle class prosperous. Believe it or not, some of us are still around who remember this system. Now everything is overpriced hot garbage. Soon we’ll be buying garbage washing machines that you assemble at home because the assembly line will be seen as dead weight that cuts into shareholder profits. As the video said, the shareholder model is unsustainable. Eventually there’s nothing left to cut and nobody left to fire.
Private companies’ interests are often in direct conflict with the interests of customers and employees. This is how we got cheap disposable products being manufactured outside of places with solid labor rights.
It is in the interests of customers to acquire cheap products and it is in the interest of workers to work for a profitable company. All our interests are connected
“So we have two options.” “Okay.” “Option 1: we release the video game now. It’s broken and unfinished but we get money now.” “Okay.” “Option 2: we delay and release a finished high quality product. Though it’d take longer it’d certainly pay dividends and earn us more money overall.” “…I want money now though.” “… *sighs* option 1 it is then…”
How else is [insert AAA video game company CEO] supposed to afford his 17th yacht? He needs that money now, he can’t let that yacht depreciate in value.
There is a reason that young people (and people who are entering middle age) are souring on Neoliberal Capitalism. They have bared the heavy burden of propping up an oppressive system and have seen little fruit from their labors. The short term growth strategy has benefited the rich and the elderly and has made everyone else realize that the system is broken
I just read today about a billionaire that was going to buy hundreds of schools here in Sweden and focus on long term growth by focusing on the teachers and students not dividends. This tanked the stock and the other share holders pressured the seller to not sell the shares and blocked the acquisition. They cared more about the short term drop than long term growth. Support for private schools are dropping because of owners taking the tax money to pay dividends instead of investing in the schools so it may even turn out that private schools paid with tax money will be banned and then they will lose everything all for short term profits.
@@drunknihilism7181it's only a nightmare when those private interests mismanage the schools, which isn't often the case. There's a reason why private schools are usually so desirable. This isn't a public vs private issue, it's a long term vs short term thinking issue.
@@hugoguerreiro1078 Private schools are more desirable because the students are from wealthy families or they're religious and don't want scrutiny. Not because they're better managed. Public schools are under funded and that, shockingly, leads to worse management. Then they have funds stripped from them, things get even worse and that's used as justification to transfer the rest of the funds to private schools instead. I don't know about anyone else, but I personally don't think we should encourage stealing from the poor and giving to the wealthy. And there is zero reason to believe that businesses or faceless billionaires are more capable of planning for the long term than educators.
The current US rail industry is a great example of the pennies and steam roller. The infrastructure is so vast and needs constant maintenance. They can cut don't on maintenance a bit here or there and save money in the short term, but it will take a massive investment to return to normal, and will be more accident prone. The Milwaukee Road is a good example of the short sighted cost cutting. Companies will also trim and cut their ability to innovate, adapt, and find new business.
People forget that ensuring the company survives throughout various cyclical swings in the market, sustainable returns and growth without swinging wildly threatening layoffs, lost of reputation and ability to secure future talent market share of the industry basically far supercede any short term gains IS also maximising shareholders value. With the recent trend towards share price as a major KPI on whether an executive has done their job, is not maximising shareholder value, its profiteering at the expense of society.
Problem is the fed will just bail them out with cheap credit at the expensive of others savings accounts. There's no incentive for consumers or producers to be frugal and risk adverse.
No, it’s not “people” that forget. It’s the shareholders and financial sectors that forget that - and they are extremely incentivized to do so. Modern capitalism is a speculative vulture and nothing else. Massive regulations, tax system changes and union power are needed to force another behavior from the owners. But we have seen the opposite - deregulations, tax cuts for the rich and union busting/weakness - not to mention the bizarre bailouts after 2008…
I always tell my friends my classic example of short-termism and why its so bad. I use Mcdonalds vs In n Out. Mcdonalds used to play such an active role in communities, giving teens their first jobs and giving seniors a place to still work later in life, they would hold community events with Ronald Mcdonald, pony shows, and lots of people showing up. So many people could attest to Mcdonalds being their first job. But as a public corp, they needed to constantly grow earnings, and you do that in two ways, growing revenue or cutting expenses. So for years they expanded everywhere in the world, introduced the cafe line of drinks, did all day breakfast, everything and anything to expand the business and grow revenue. But you can only grow so much, so they started cutting expenses by having less full time employees and more part time, and then introduced more automated menus and cutting staff to the lowest levels ive ever seen for them. And of course, the quality of their food has declined over time, at the same time the cost continued to increase exponentially. And then of course they are mad about minimum wages going up, not because they cant afford it, but because it cuts the earnings per share. They made $8.67 billion in profit last year, a 37% increase year over year, but they cant afford higher wages?? Conversely, In n Out is privately held, never felt the need to recklessly expand, has always paid their employees great wages, has many many more employees in each location than mcdonalds, has much higher quality of food, better service, and better prices, and has even raised their prices the least after recent minimum wage law increases. Annnd, look at the results, every In n Out you go to basically has big lines no matter what time of day you go. In general i think In n Out represents what businesses used to be, and what most people running their own businesses would think; If you make a million dollars profit last year in your business, make a million this year, and make a million next year, you are happy because you covered all your expenses and still were really profitable. Heck, even if this year you only made $900k in profit, you still did well! But in a corporation, a million dollar profit 3 years in a row is a failure without the growth %s the investors are demanding. And that leads to things like billionaire dollar profitable companies like Mcdonalds decimating their work staffs, and billion dollar profitable hospitals closing emergency room hospitals in major urban areas, because that doesnt help communities at all, it only helps shareholders. I wish, and hope, this stuff starts getting out there more, especially since these huge corporations long since chased all the mom and pop stores out of markets and we are all just at the mercy of corporations and their lobbyists now.
It was eight years ago, i was working for zeven years and the company ceo said during a years overview that times would be tough, but they would increase the value of shares by buying them. And on that moment it didn't make any sense. If you have funds and you know times will be tough, there is a better way to spend it right? Left a year later, stock is now about 20% of what it was. Has seen two new ceo's since.
I just read “The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America-and How to Undo His Legacy” by David Gelles, which discussed the emergence of shareholder primacy at length. I thought it was a great book and interesting topic as someone who is just starting out in the corporate world. Glad to see a video on the topic, too!
The problem is it is almost impossible to put the genie back in the bottle now that it has been let out. Wall Street is absolutely addicted to short term thinking. Any CEO who tried to prioritize the long term viability of the company gets shit canned and replaced by someone who will destroy the company for short term profits.
@@yomanyo327there is already a distinction between short and long-term capital gains. Maybe the line (generally 1 year) needs to be changed - but as long as capital gains tax is lower than income tax, executives will always prefer compensation in stock options.
The reason being is because of the institutions that make these CEOs. They pretty much collaborate with one another and influence other CEOs on how to play their roles to follow the "unspoken rule" and they're incentivized with "failing upward" with these golden parachutes.
The Shareholder Value mindset leads to every company becoming the exact same company. Boeing, Apple, Exxon, Pepsico, Disney. Salaries and quality will always be as low as possible. Prices will always be as high as possible. Skills and roles are seen as interchangeable. Strategies and moves are the same high risk, cost-cutting affairs. Speculation and marketing is king. The part where you actually do business is just a minor inconvenience.
Outside of the dollar signs and stock prices, this mentality has shredded the social contract between employers and employees. The current system is exploitive where companies just want to maximize productivity out of people in the short term, burning them out. We're all cynical, bitter and frustrated over our professional lives for the most part. Employees are expected to devote existence and be loyal ("we're family here!") but are immediately disposable. It's just not a healthy economic system and it's poisoning most aspects of our lives.
That is why the only people who should be able to "own" a company are the employees who put in the actual work. If someone makes money off of someone else's labor, they will always be incentivised to take a bigger and bigger cut. They are evil. They have never hidden it nor do they care to. Money rules our current economic and political system when it should be ruled by the will of the people.
@@TheSuperRatt In the 1950s it massively better. Most jobs offered generous pensions, hired people on the spot and paid enough feed a family suburban household on a single wage.
@@MVargica high school dropout could get a job as a janitor, work forty years at a rate of pay sufficient to buy a house, a car, get married and raise four kids, and take multiple vacations per year, then retire with a full pension. If that’s “exploitative,” sign me up.
I have heard that Ford needed to offer those wages and that work week because his turnover was so high due to simple, repetitive tasks being really miserable to do all day long.
And also because if he didn't, his workers would start getting ideas. Like, why are we struggling doing all the work while ol' Henry gets all the profit? That dynamic never changed. It was just sidelined for a few decades by the social programs which saved capitalism from the workforce it exploits. But because capitalism is a relentless machine which only values immediate profitability, it has consumed those programs and controls as it does everything else. And so it will fall, incapable of understanding that it brought this upon itself.
@Frommerman I imagine he was getting the profits because he founded the company and took part in the inventions that made the company possible. I'm not claiming Ford birthed the model T and its processes from scratch in his garage. But if anyone gets ripped off in these situations, it's the engineers and scientists who do the development work. Nothing would be possible without them. As far as the workers' negotiating power goes, the reason they lacked/lack it goes back to Renaissance Europe. Honestly, it goes back to the Roman Empire. Noblemen, like the estate holders they came from, slowly lost rights and control over the lands of Europe. But as the middle ages ended, they seized these rights and lands back. This meant that when factory jobs came about, funded by rich utopians--invented by gentleman scientists--rather than by the defunct trades guilds or village associations, the people applying for those jobs had little personal property to fall back on if they got fired and no legal rights. That means no negotiating power.
Quit just generically bashing capitalism. The "exploited workers" have it better under capitalism than any other system. Surely there are areas to improve. But the best systems are still capitalism at their core.
@rightwingsafetysquad9872 There are plenty of people that capitalism excludes, and this current version is among the worst. You just praise it because you’re not excluded from it. At least not yet.
As a shareholder, it's more important to me that a company does not destroy its reputation, its employees' morale, put its customers in danger, or cause catastrophic environmental impact for the sake of increasing shareholder value. I want to own companies that are run by people who have souls.
This nonsense is one reason why I have said for years that I would never go public with a company. Period. It is a deal with the devil. In the long term there is no way to reconcile the perverse incentives, and you get to keep your job or keep your soul. I have gotten to observe the board of a small company for years now, and the shortsighted approach that dominates is appalling... but they don't care, they're all old and just want their payout. No reinvestment in the company has been made, no acknowledgement of the power of concentrated wealth over dispursed wealth. Absolutely surreal.
If these business ideas are vetted prior to starting up by a financial institution like #TDBank💳; then they could be stopped b4 any harm can be done... 🌎💘💰
I think the scary part of this concept of maximizing shareholder value over sustainability is that a large portion of the market(Probably close to 80% of publicly traded companies in North America), have been operating with this strategy for 3 decades now. It should have ended in 2008 but the entire economy got bailed out with 0% interest rates, instead of fixing the core issue. This pretty much gave execs a license to keep being idiots, and keep going into "unrealized debt" by penny pinching on key business initiatives that are critical to longevity. We have hit a cross-roads in the economy where the "fruits" of all of this "unrealized debt" from maximizing shareholder value is coming due, and all at once. You can only imagine the absolute carnage that is going to reap.
If these business ideas are vetted prior to starting up by a financial institution like #TDBank💳; then they could be stopped b4 any harm can be done... 🌎💘💰
A couple of years ago Darden restaurants did a 1 billion dollar stock buyback right before the price of beef shot up. When the price did go up, instead of charging customers more, they cut the hours of every worker and had them do multiple jobs at once. This lasted for like 7-9 months
@The.QuasiOG The working poor have more experience with this than anyone, regardless if the stock market is involved. Walmart’s been getting subsidies for keeping their workers on food stamps for how long?
@@kevinlue4756 I don't think you understand what doing the workload of 2-3 people actually means(for instance a closing that takes 3 people 2 hours after the close of business will take 1 person 6 hours. On top of the 8 hour shift they already worked to get to the close of buisness. I've done that, and I wasn't even done by the time the opening shift came in _because there's a reason why it's a 3 person job._ And that was just because of bad luck with one of other people being sick and the other becoming injured during the shift, we're talking about that kind of workload being expected as standard) Or the fact that "working poor" means that people are working full time while not making enough to be over the poverty line. In fact you come across as being completely divorced from the reality of what is being discussed.
Imagine buying a movie for 50 dollars. Every time you want to watch it, you need to insert a dollar bill in your TV. In the movie itself, there is not just product placement, but advertisment for extra scenes you can buy for only $19.99 each. You need to maintain internet access for watching the movie, although this is no streaming service. In a couple of years, tech service for the movie will end and you won't abe ble to watch it anymore. Sometimes, the movie just stops working at all. The screenplay and story is mediocre at best. This is the current reality for the triple-A video game industry of Ubisoft, EA, Blizzard-Activison and others. Increasing shareholder value destroyed 90% of electronic entertainment.
@@valentinmitterbauer4196 I don't understand why people keep buying their crap. I switched primarily to indie games like 10 years ago as soon as they started paid cosmetics. I played thousands of hours of games like terraria which I pre-ordered for $20 and has had dozens of massive free updates. To some extent I feel like this is consumers fault. These companies are killing themselves, stop paying them and let them finish the job.
@@valentinmitterbauer4196 Who is making you buy the triple A games? You do realize it's people like you who preorder the garbage they put out that are fueling their decisions. Especially with gaming, since it's a luxury.
Management in public companies can have problems managing loose cannon shareholders and shareholder expectations. Even in closely held private companies, shareholders objectives evolve with different life stages (retirement for example). A local businessman inherited a medium sized manufacturing company with a
Instead of giving all the money to the CEO and Shareholders, maybe spread the money with the people that made the actual goals possible. You know, to incentivize workers with positive reinforcement rather than the threat of job security that is slowly killing people. We have yet to learn how deep these consequences will run until a few generations down the line, we’re starting to learn about the impacts of generational trauma and how this is passed genetically.
The solution is hilariously simple, but will never happen, because it requires everyone on the planet to simultaneously stop looking for work until the requirements are brought back down to a reasonable level.
There is a runaway trolley barreling down the railway tracks. Ahead, on the tracks, there are the trolly company's low and mid level employees tied up and unable to move. The trolley is headed straight for them. The company's executives are standing some distance off in the train yard, next to a lever. If they pull this lever, the trolley will switch to a different set of tracks. However, this will delay the trolly and cause the company's stock price to miss growth projections. They have two (and only two) options: 1. Do nothing, in which case the trolley will destroy the lives of the people on the main track. 2. Pull the lever, causing the company's shareholders to lose out on a half-percent of returns for that quarter. Which is the more ethical option? Or, more simply: What is the right thing to do?
@@heitorpedrodegodoi5646They seem to be happy enough to pull the lever even when they do see the employees. Some people just don't care about anything but their own wealth.
I see a lot of execs picking the third option; two track drifting. Why just destroy hundreds of lives when you could destroy hundreds of lives AND crash your stock price in the process
This is why I was investing in intel recently. Their CEO pat announced huge investments into capital for the future. The stock price tanked though because investors knew that meant earnings would decrease for a while while it was happening. Bottomed out at like 26-27 and then shot up to 44-50 recently. I thought the investors were stupid. I still think that.
Intel is sinking because they hid issues with 13/14th generation processors rather than try and fix it. The processors are also not as efficient as AMD they are also not sustainable in development because of transistor development issues that Intel has put off to keep costs down… they have been LAZY… and it shows.
This video rightfully highlights some alarming corporate practices. It's indeed a food for thought, how short-term gains are prioritized over long-term, sustainable growth.
That judge siding with the minority shareholders was the most morally questionable, most unfair and most consequential decision ever handed down in corporate history.
@@Peter.F.CIf these business ideas are vetted prior to starting up by a financial institution like #TDBank💳; then they could be stopped b4 any harm can be done... 🌎💘💰
It is not a question of what's best for the company. Not even clear what's best for the company might mean. The objective is to increase returns to shareholders. But not one group or one shareholder at the expense of others. Stealing shareholders money and giving it to someone, even if they happen to be a shareholder, is something that a court should not allow. @anna-flora999
You could make a corollary channel called “How Money Should Work” where you highlight examples past or present of companies doing things in a more right or ideal way, and what widely shared benefits that produced
@@Aighthandle im thinking much more about the American economy in the period of 1940-1973, where companies had finally turned from their Guilded Age ways and gave a lot of ground to their workers on things like worker pay & benefits, unions, & reasonable executive salaries, and when substantial U.S. Gov investment drove innovation & infrastructure. Democratic capitalism, if you will.
Or at least a series on it within the normal channel. AMD since Lisa Su took over seems like a good potential candidate for something happening recently. Older companies would be cool too
@@ryanevans2655I think you're forgetting that that particular time period, was disastrous for other countries. A lot of the accumulation of wealth in America, the proliferation of certain goods, was only made possible because of truly evil actions. An example of which being the pillaging and ravaging of Latin America (subversion of democracies, banana republics, coups and installation of fascist regimes). American wealth is, and always was, built on the backs and blood of foreign peoples. As someone descended from a victim of American economic imperialism, I stand staunchly against that.
The dutch IRS offered all employees a golden handshake when they left voluntarly. The most valuable employees left and more than anticipated and not valuable employees stayed behind. A few years later the IRS had a huge shortage of employees which are still slowing tax collecting decades after the incident.
@@rightwingsafetysquad9872have you spent any time understanding the systemic causes of poverty? Every individual is a group project and most of the poor represent a group failure. Those things you hate about the poor are most likely byproducts of group failure. If we put you in their position long enough, you would likely begin displaying many of the same qualities. You might be surprised to learn what cPTSD, chronic sleep deprivation, malnutrition, and long term exposure can do to an otherwise functional and ordinary person.
There I was, studying Business Administration at the best university in Latin America, when I had the Dean of my college (who was also one of our teachers) saying that the role of a company is to maximize shareholder value and showing me that the world I was getting myself into was not one I was going to enjoy working on nor would I agree with 🙃 It was a sad realization...
This is exactly why I'm suddenly scared to fly or ride Rollercoasters. Corporations only care about making more $ and again not paying the very ppl that RUN thier business. And if you don't make decent money at your job. You know those workers don't care. Can't blame the workers either
The term was coined in 2022 for the downgrading of online platforms-increasingly cutting corners & screwing their users/business customers to milk short-term gains for investors-. I've also seen people use it to refer to how AI, SEO/algorithm abuse, etc. have hurt the Internet in general
The biggest problem: Convincing people to stop doing this is impossible. Business will go bankrupt in 10 years? Just Find a new business. People hate the lack of quality? Find a new business. Government shut it down? Find a new business. It's predatory, destructive, cruel, selfish, and doesn't plan for the future at all, but as long as they are profiting, they won't stop.
How to fix businesses and corporations: 1) Companies are not people and do not have the rights a person has. They cannot have limited liability or form contracts. Your contract is with a human representative. 2) Companies cannot own land. Only living American citizens can. A human's name must be on the deed. They are responsible for what happens with their land. 3) If a company commits a crime, its punishment is distributed among its owners/shareholders in proportion to their shares. They are responsible for their behavior.
Every time stuff like this get covered, I just realize that shareholders are just like gambling/ drug addicts that want a quicker and bigger hit. They don't care who they have to sell out to make it happen.
This video leaves out the fact that the main shareholders that brought about these "profit first" laws were the The Dodge Brothers. Ironic how Dodge's greatest vehicles were the Demon and the Viper, because these two were exactly that, a snake and demon.
As someone who is passionate about investing I wish companies would just focus on fundamentals and let the share price reflect their (real) growth as a company overtime. (I also love dividends but would rather know a company is well managed than get a temporary dividend that makes the holding less secure.
Lmao. They'll never do that. They literally can't. They ate the only systems which sorta made them do that for a few decades, just like they eat everything else. They'll eat you, too. They're already doing that though climate change, but more directly as well. Companies and the system in which they exist are incapable of seeing you as anything other than numbers. Some amount of labor which can be extracted and directed into the pockets of your *betters.* Some amount, to be minimized at every turn, which you require to scrape by. Some amount required to distract you, make you think any of this benefts you. That's all you are, to the things you invest in. A crop, to be harvested.
I once had a training period where I was given a document with tons of jargon I didn't understand to sit and read for an entire week while almost nobody talked to me and then pushed onto a team of already busy people that were also supposed to train me as I immediately started taking projects. I hadn't even been given credentials to log into any systems, so I had to have one of them create a new IT ticket any time I had to do something new.
the fix is simple, pay the management team a meager base salary, and have the rest of the compensation in shares that vest in 20 years, that way their incentives really do align with long term shareholders
I mean, it would probably need to be a bit more than a "meagre" salary (I'm expecting big bosses to want to be paid well), but incentivising them with long-term unvested shares is a great idea.
The problems listed don't seem to have anything to do with the maximizing shareholder value model. In fact, most of these are explicitly the opposite: using various tricks in order to hide the actual performance of the company from shareholders. Brand and reputation doesn't show up on the balance sheet (except as part of a merger), so, yeah, you can make your numbers look good through extracting earnings (numbers that do show up) by ruining your reputation (numbers that do not show up). However, this is obviously not in shareholders' interests. The problem is that the stakeholder model also has enormous issues, in that it essentially gives management leeway to do whatever the heck floats their boat, with no real oversight.
It does have a lot to do with maximizing shareholder value, as you laid out. Reputation doesn't show up. It doesn't influence shareholder value from the point of view of the shareholders in charge.
If these business ideas are vetted prior to starting up by a financial institution like #TDBank💳; then they could be stopped b4 any harm can be done... 🌎💘💰
What we need to keep in mind is: Private Equity has several companies that sell nothing but 'efficacy.' This concept, which is just 'Maximizing Share-holder Profits' misnamed so people think it is good, is being marketed to board members of other companies. Due to the fact these consultants cost the company quite a bit of money to do their 'inspection and report,' they are often listened to regardless what that advice is... Loss-Sum. That the advice does make the stock prices go up too, it can seem like it is bringing success until the company realizes it's coffers are broke, it's workforce depressed, and it's customers demanding their concerns be addressed.
Boomers experienced working for companies that reinvested back into themselves, and as soon as they got themselves in charge, abandoned that strategy in favor of appeasing shareholders. And now they want to lecture us on how things were better back when they were "on their way up" the corporate ladder.
Employee owned coop companies seem to be the best idea to me. Employees generally want what’s best long-mid term to keep a stable job which is generally also good for the customers. Happy employees make better products and have better customer service
I think utility companies need to be federalized and have their board of directors elected in rank choice government funded elections. All the fun things can operate however, but we need to get extortion out of the market. People need access to preventative and restorative care, education, food, water, basic shelter and some form of telecommunication to keep a job. We need to elect the people who control these things, so they're beholdent to the voters and we know what we're voting on, instead of the senate who manage foreign policy, and medical access, and large environmental regulatory changes, and finance and media, and etc. etc.
Odd idea, but hear me out- scandals/per year. The less massive public incidents you have the better. Of course this wouldn’t stop people from burying things under HR but it would at least stop them skimping on safety regs. Ideally, they’re be an internal one as well for anything that did go wrong and that they did bury-you’d want that close to zero as well.
There are investment groups which apply ethical and sustainable practice standards to assess whether to invest in a company. They tend to outperform the market. Some share their criteria. Criteria can include possibility of shareholder activism improving actual performance as conditions change. I know of one which held shares in a destructive company for a time, in order to attend annual meetings and put motions seeking improved behaviour.
Issue is that as soon as a metric becomes a goal, it becomes useless. People will figure out hacks and gimmicky business structures that make important number high without actually doing the things the number is intended to represent. For instance, to avoid the issue of public scandals, a business may move its manufacturing base to a country with poor workers rights and safety laws, or hire undocumented workers who can’t safely report safety issues without risking deportation. They might lobby local government to relax or subtly rewrite safety laws, or if they’re big enough, simply threaten to leave if the local authorities raise a stink. They might also “sponsor” media institutions, which are constantly whining about lack of cashflow, and create a perverse incentive to prevent journalists reporting on screwups. Hell, they already do all these things, they’d just do it harder. I think at least part of the solution will be to chance the way people think about money and business, and require more transparency. Also stop hiring pillocks as CEOs, give them some reason to care about long term performance of the companies they run so they don’t just come in, fleece all they can, then drop out before the rest of the world realises how much they’ve torpedoed the business.
Essentially, we live in a system where the people who actually do stuff get fired or suffer pay cuts to give idle rich people even more money they don't need and hoard the bulk of it.
And they pay lower taxes on that income because capital gains are taxed at a lower rate than earned income. The tax code literally rewards you for not earning your money.
Last year, I was working full time, budgeting groceries, unable to afford date nights, and missing time with my kids. Now I learned how to make money online. Now am a SAHM, homeschooling, and making profits every week.
Toshiba is going down the same route, sadly. Last year a handful of companies get together and bought majority. Now most people think the new shareholder will carve up and sell the company, with their first scandal up in the air earlier this year. Sad ways a big business to go.
Is the stock market actually getting better or is this the regular market manipulation to entice new investors, I'm currently sitting on an inheritance of 300k and i'm wondering do I invest in stocks or Gold?
Even while $300k mightt seem like much, one bad decision might seriously deplete it. As such, exercise extreme caution in where and how you invest. It is advisable to diversify while retaining 70-80% in secure investments. Along with your budget, you should think about financial advising.
Its unclear which stocks and sectors will lead the market in the next uptrend. Stay away from rebalancing if you do not have giudance from a plannner and invetsment strtegist. My finances have been in order since I got a wealth planner like Monica Mary Strigle working with/for me.
The decision on when to pick an Adviser is a very personal one. I take guidance from ‘Monica Mary Strigle‘ to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
It's good you make your own research. and make sure whoever you work with is licensed n verifiable with a repute, this monica looks the part but i'd do my due diligence. I set up a call, tnks.
The explanation I learned about Ford many years ago, was he increased the daily wage to $5 to create more Ford customers. That is, he raised wages to the point where his own employees could afford to buy Ford cars. He increased wages to increase the market for his products.
Shareholders and investor's are ruining gaming too. All the studio closures and layoffs of late are due to them demanding higher profits from their studios. Dangling bonuses in front of CEOs and managers as a reward for obedience certainly doesn't help either. It's like they really run the company.
Unfortunately, it's not even a choice for businesses to deviate even if shareholders are on board with long term growth. High Wall Street valuation means affordable access to equity through direct stock sales and collateralized loans. If you don't play Wall Street's game, it's difficult to gain access to the funding to make long term investments, especially since all your competitors will.
Exactly. Some people really think that it’s good thing that people can generate more wealth by doing less and easy work then by doing important and hard work like construction, sanitation or first response. I can’t believe some people think that people born from rich parents that got rich from investing their inheritance should have a higher standard of living than a firefighter or paramedic!
finite investments demanding infinite returns is so ridiculous it is shocking that it is just generally accepted, of course this 100% ensures companies and services get shitier over time
The silly part about shareholder first management is that shareholders are supposed to be the last puppy to the bowl. These corporations are treating shareholders like they are bond holders. Stock is a long term investment and unfortunately it’s not being treated as such with this management strategy, and ultimately it leads to much more volatile economic cycles due to constant over evaluation. The video anthropomorphizes this as picking up pennies in front of a steam roller, but I prefer the term “stepping over old dirty dollars to pick up shiny new pennies”
It's stuff like this that makes me want a law that people in progressively higher positions in a business must at least know how to perform every task in their business' daily functioning that their subordinates do, even on the lowest level.
Is part of this thesis that, in a lot of these cases "the shareholder" refers directly to Blackrock/State Street, so it's a bad idea to attach incentives to these giant investment funds ??
Or, you pass a law to allow for the courts to appoint replacement CEOs when the current CEO is trying to maximize shareholder profits, and you in turn make sure that the king who is appointing said judges cares more about the general welfare of society than maximizing profits. I say “king” because you basically need that kind of system.
Risk management team members have a unique position at most corporations, and must maintain a delicate balance. Revenue-generating teams see them as "obstacles", while the Risk teams are constantly trying to prove their worth. It's easy to see quarterly fee income increased by 10%, but not so easy to see that 10,000 account takeover attempts were thwarted in that same time period.
Every company is a ticking time bomb. Ones that go public and just massively shorten their fuse in exchange for a quick buck. With private at least you get a chance to not have a short-term maximizer take over, with public it is almost guaranteed to happen soon as shareholders can possibly force someone who will give them more money in the short-term onto the company.
That's why equity investors buy businesses to bust them out. It turns the entire economy into a giant bubble. Shareholder value is mostly increased by hype.
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wow thanks such a great idea the feds totally arent interested in people who join that bro!
This may be the best video you have ever made. Every single point you made was a home run.
I am interested in how taxes changed the decisions all thes people make.
Can you stop stretching out your words. Your content is good but your speaking style is obnoxious. “Amerikhah,””shareholdoor vahleeyooouh,”findehet,” companeeyh, emploeeeeyaeh,” “eeligahleeeyeah.”It sounds like you’re jizzing while talking.
you forgot to say that this idea has stay relevant because of state intervention, so the state and its evil hitmen AKA lawyers are the main reason because they are also scrapping pennies in front of a steamroller, they want to prevent people going batshit crazy.
Norfolk Southern approved a $10 billion share buyback program and a 9% dividend increase just before they told their employees that they couldn't afford to give them any sick days and 10 months before they had a giant accident that poisoned a whole town because they wouldn't invest in maintenance and pursued understaffing to save money.
They probably bought back those shares by issuing corporate bonds at (then) a very low interest rate.
Those same employees will be retiring at some point with a 401k that is funded by businesses that do the exact same thing.
A lot of people demonize looking out for shareholders until they see their retirement portfolio underperform.
@@badluck5647 Capitalism makes people complicit with the exploitative relationship by making owning stock, real estate, bonds, and other financial assets as one of the few ways to be secure in their older years or when they fall too ill to work. A deceptive part of capitalism is that allows people to own equity on a market basis unlike feudalism but it is in such vast inequality and alienation that the Bossism and Landlordism starts to look a lot like a form of neo- (commercialized) feudalism.
@@rogerbartlet5720 I did some research... And you're right. $1Billion in corporate bonds!
"New issues: Issuer Norfolk Southern Corp released international bonds (US655844CM86, US655844CN69) in the amount of USD 600, USD 400 mln maturing in 2032, 2053 respectively.
February 17, 2022 Cbonds
On February 15, 2022 issuer Norfolk Southern Corp released international bonds (US655844CM86, US655844CN69).
• In the amount of USD 600 mln with the coupon rate of 3% maturing in 2032. The issues were sold at the price of 99.999% at par. The bookrunners of the placement were Citigroup, Goldman Sachs, U.S. Bancorp.
• In the amount of USD 400 mln with the coupon rate of 3.7% maturing in 2053. The issues were sold at the price of 99.412% at par. The bookrunners of the placement were Citigroup, Goldman Sachs, U.S. Bancorp." - CBonds
@@rogerbartlet5720 I did some research and you're right, $1 BILLION in corporate bonds!!!
"On February 15, 2022 issuer Norfolk Southern Corp released international bonds (US655844CM86, US655844CN69).
• In the amount of USD 600 mln with the coupon rate of 3% maturing in 2032. The issues were sold at the price of 99.999% at par. The bookrunners of the placement were Citigroup, Goldman Sachs, U.S. Bancorp.
• In the amount of USD 400 mln with the coupon rate of 3.7% maturing in 2053. The issues were sold at the price of 99.412% at par. The bookrunners of the placement were Citigroup, Goldman Sachs, U.S. Bancorp." - CBonds
I never knew what was itching my brain about a CEO's conflict of interests within their own company until now - most of them didn't build their companies, and they have NO incentive to see it's survival past their tenure. Long-term planning and sound business strategy are things of the past.
You can keep all the bonuses even if the whole company collapses catastrophically into burning pile of garbage as long as you cashed your bonuses out in time
America runs like that so what's the big deal?
@@andybunn5780 America shouldn't, and corporate structures are a big reason why.
CEOs care about two things: bonus and compensation package.
@andybunn5780 The big deal is that there are consequences to this and you can only kick the can so far. When the can finally reaches the end of the road the consequences are catastrophic, and the solutions that could have been implemented to actually solve the problem three blocks prior will no longer work.
I've lived this. Worked for a fortune 500 company that every single quarter results were about 1 minute of congrats for beating expectations and 59 minutes of all the things we need to do better. It seemed unsustainable to constantly do more and more in a saturated market, working for a mature company. I would always sit back and wonder why isn't it enough to just have a profitable business, with steady revenues. Instead, everyone was miserable, expectations were off the charts, work/life balance was non-existent and layoffs always a looming threat.
Because this is how company's create a culture of performance by not increasing pay. Just increase stress and anxiety and you will increase performance, it's a new fad and you will only see this get worse.
I just moved to a company like this. Best expectations by a wide margin? Great, now increase that by 20% next year!
I'm not sure what the plan is for when there's an inevitable downturn...
Plan? There is no plan. There's only maximizing shareholder value, no room for planning in that!
@@business_man_alexit’s going to bite them in the ass. Already people are acting their wage now that the companies are treating them like this
@business_man_alex New? Nah. it’s more widespread and more people can hear the time bomb ticking.
And this is why I'm glad I work for a company that's not publicly traded. The leadership makes business decisions based upon actual business value, not raw greed, and we, the employees, actually get treated well as a result. I'll most likely stay where I am until I retire.
I worked for a privately owned company that was total shit cos the boss' bonus was based on that year's profit.
Stress free
Private companies or established mid-sized companies are good to work for. I did a short gig at one and they treated people (and customers) well.
@@spankeyfishideally, the owner of the company is involved with the running of the company. That way long term plans are put forward and not short run
amen to that but there exceedingly rare to find
Got my MBA. Teacher walks in and says, "This week is information I'm required to teach you. It's the dumbest thing you will ever hear and it was proven false in the 60's. First, Stockholder Wealth Maximization"
I knew it!!! Daym. Thanks! I knew mba is full of shit!
its sad that I had a feeling the way businesses were run today made little sense and this was back in Highschool where I took a business pathway. Stockholder Wealth Maximization sounds like to me. "How can I get as close to a gilded age robber Barron as possible"
@@kappadarwin9476 When I was in high school, we were barely taught about how businesses run - only to finish high school, graduate college, and go to work for them...
@@go_better it's still a very valuable degree that teaches much of what you wouldn't learn in the field unless being taught by someone else with an MBA. You just got to vet the college and teachers before you go. Just because it's a big name doesn't mean it teaches reality.
When I was getting my business degree it was more like a Jack Welch worship session. Jack Welch was the Messiah who could do no wrong. I felt stupid because I thought the whole thing was wrong and I was simply too much of a pleb to ever understand the 4D chess CEOs play.
I had a colleague who was useless at her job. Got a big promotion to a new job and couldn't understand how. Found out the new employer had an internal auditor who found loads of issues. That auditor was let go and my friend, who they knew wasn't competent enough to find the big issues, got hired!
Why does this happen?
Probably because it’s easier to raise poor performance than high performance. But don’t worry, the incompetent worker won’t be the one raising performance. You’ll be doing it for them.
My knee-jerk reaction is "she was promoted for her diversity." DEI has made it next to impossible for companies to obtain financing without performing equity theater and showing banks they're promoting appearances over real talent. My 2nd knee-jerk reaction is, who's she sleeping with 😂 But maybe I'm just jaded.
Some people interview well. Especially in technical interviews done via zoom/teams/etc., it's becoming more common for people to cheat
@@IcicleFerretyou might feel more comfortable on ben Shapiros RUclips channel. Where they blamed the door flying off an airplane on DEI.
If you're going to stick around, don't repeat racist agitprop.
The CEO's dream is to make one reckless decision after another until your company reaches "too big to fail" status, at which point your terrible decisions will no longer have consequences because you can just hold the entire economy hostage and force the government to bail you out over and over again.
And if that doesn't work, just cash out before the stocks start to drop and get enough in your severance to retire at 40!
And the CEO's nightmare are antitrust laws that actually have teeth.
Government has no money to bail anyone out. Its taxpayer money.
Boeing cutting down on safety controls and testing is the thing that pisses me off the most. These psychos have literally decided that their returns are worth more than the safety and lives of their machines passengers. Literally criminal behavior.
I think that all happened after the change from an Engineering-Educated CEO to an MBA CEO with little no engineering experience? Like, wtf is such a move even legal in a field that is usually pretty brutal when it comes to safety? Not to say that all MBA CEOs are necessarily bad or evil, but the one responsible surely was.
Dennis Muilenberg was actually an Engineer by trade before becoming CEO (and resigning because of the 737 MAX crashes). But the larger point still stands that even people who should know better will still knuckle under when their pressure and incentives are pushing them in the wrong direction
@@Erohlson Ah that's a good insight to have. One wonders how "having planes crash" does "increase shareholder value". It appears that the exact opposite is the case, considering the image problems Boeing now faces. Seems...extremely short sighted, almost to the point of blindness.
Exxon Valdez taught us it's cheaper for companies to drag things out in court with lawyers on the payroll for decades than avoid the problem in the first place or pay damages, until almost all of those affected have all died and they only have to settle with a few parties.
@@fortyfourandgore9787 Holy I didn't know about Exxon Valdez (it was a bit before my time).
"Investigators later learned that Joseph Hazelwood, the captain of Exxon Valdez, had been drinking at the time and had allowed an unlicensed third mate to steer the massive ship. In March 1990, Hazelwood was acquitted of felony charges. He was convicted of a single charge of misdemeanor negligence, fined $50,000, and ordered to perform 1,000 hours of community service."
Those must've been some darn good and soulless lawyers...
@TheFriendOfLucifer I don’t think it’s that they see having plane crashes as increasing shareholder value, but rather they see spending on improving safety as decreasing shareholder value. There’s also the hopium of thinking that it’s an isolated incident until reality shows that it’s not.
The ‘small government’ cheerleaders simply want to remove legislation that legally binds them to do the right thing because doing the right thing has costs. Safety legislation in particular gets put in place as a result of companies not doing the right thing on their own in the first place.
Jack Welch is a perfect case study in someone who essentially ran a ponzi scheme with shareholder value. Made the line go up long rnough to cash out, then left the place to burn.
can you explain more?
@@annibhardwaj6914 The man ran General Electric like a financial firm. He would essentially make predictions for how GE would perform each year and quarter, then buy and sell companies to match the numbers he chose. This made GE seem like a more reliable stock, when in reality Jack’s business strategy for each new company was to simply maximise profits by mass layoffs and cutting projects.
This approach was fundamentally unstable and ultimately led to the collapse of GE, but by then he’d already made his money and jumped ship, leaving the company to burn.
@@annibhardwaj6914 Jack Welch effectively chopped off parts of GE and fed them to the shareholders. The shareholders seemingly didn't clue in that not reinvesting the savings from layoffs and proceeds from sales of assets means the business does not increase in real value.
@annibhardwaj6914 Jack Welch used a lot of creative accounting, and essentially stated that if GE wasn't either the number 1 or 2 player in a product market, they would sell off that product or division. So on paper, it looked like they were more profitable, and yet shrank over his tenure. Before Jack, GE was a leading engineering firm in almost every product market using electricity. When Jack came onboard, most of the products either were rebadged products from other suppliers in Asia, which were lower quality at the time, or completely sold off to other companies. Meanwhile, he would sell off entire divisions and plow that money into financial services and industries that GE didn't have a foothold or history in (see GE's purchase of NBC).
@@caseyroberts1171 This exact same thing is happening to several major videogame companies, and i do mean *the exact thing you're describing*.
Isn't it so convenient that these people never see the amount of potential profit they throw away by shutting down any division which isn't actively overperforming? Wonder how long it'll take for the business world to wisen up to this (if they ever do), since the governments of the world sure don't seem like they'll intervene in any of this behavior in any way anytime soon.
I've been telling myself this for months now: everything's going to shit because the economy is run by people who would set their house on fire to warm themselves up in winter
That shareholder first mentality was what broke IBM. The company executives strived to reach very high EPS goals to the point of starving the company from talent, investments in R&D and building new products.
Eventually their products became obsolete and irrelevant and couldn’t remotely compete against modern cloud services from Amazon and Microsoft.
The same IBM that did over $60bn gross revenue and over $7.5bn net income (more than 4x YoY growth) last year? They seem to be doing pretty okay? They’re not the giant they were in the 80s, sure, but they aren’t spiralling the drain either and haven’t been so for years.
@@TAP7a"They aren't the giant they used to be."
Dude you are so close to understanding.
@@TAP7a They're still relevant in the mainframe industry, but nothing else pretty much. That's the point. They used to be supreme authorities in IT. That's not the case anymore.
All large companies are seeing one major seldom mentioned shortcoming of "shareholder value" now, the skills shortage. Looking at job listings in my area, everything is either entry level or senior positions. Nothing in the middle. Companies aren't loyal to the employees, so in turn the employees aren't loyal to the companies. So no one is with a company long enough to develop and refine the skills needed to perform at a senior level. And no one wants to hire and train for mid-level work when they can just lean hard on their senior employees and let the expectation of incompetence fill in the rest. Industries like telecom, railroads, and construction are in for a major hurt.
I would say that remote work and IT has also hit all other sectors, people have started to think, why would I risk my life or my back or legs if I can get more money doing....whatever... on my PC. I feel an impending doom to the way of life of the mid 20th and beginning of 21st centuries. Almost as if we are on the edge of technological greatness or societal decadence and a new dark age.
You cannot keep wages stagnant yet productivity went up 2X, at some point that excess productivity will either disappear or will have to be transferred to the people creating it.
@WetPig True. People aren't going to transition from WFH to railroad or telecom work unless the pay is much higher. And for some reason most WFH jobs pay more right now.
Company loyalty is a 2-way street. If employees aren't loyal and will quit my hypothetical company to work for my hypothetical competition, or even use the training I paid for to start a new rival competitor, because that change offers better benefits to them, then that disincentivises me from investing long-term in my employees for the sake of loyalty. Loyalty is no reason to stay anywhere, if you the hypothetical employee can do better elsewhere.
@IcicleFerret Of course. But it was the corporations, specificially GE, that fired the first shot.
@@rightwingsafetysquad9872 Not sure I agree with that. Day laborers have always been a thing since antiquity. Only a very small percentage of ever experienced employment security, and assurance of having a paying job was a huge motivator behind learning a trade: For example, everyone needs shoes, so if one learns to make shoes, one can always earn a living. One of the driving forces behind the theory if scientific management on the 1890's was to create work standards for any person to be able to come in, follow a list of instructions, and do a job well. Companies often found that labor was unreliable: employees missed work, moved, or were unskilled. They needed to make sure they could still function, and function at a reliable standard, without having to rely on any one individual.
My dad told me running a company is like running a marathon. You gotta keep moving at a good pace and avoid tripping on small stuff. And the runners who only care about appeasing shareholders at every move are like people who cut off thier arms mid race. Yeah, you lowered your weight meaning you can now run faster but you will bleed out either after you crossed the finish line or before crossing.
Except the CEOs that are "cutting off their arms" aren't the ones who have to finish the race. They hand it over to someone else mid way and it's now their problem.
More like the coach cutting the runners arms off and then getting offered a highly prestigious position at another college, just because his runner is currently in the lead in the marathon, which he takes and aways away from the current program before the runner bleeds out and collapses. Maybe they manage to limp across the line and survive, but they're still crippled.
Uh except you can't run without that arms swing. Now in know none of you ran track.😂
@@joe-zj8js armless runners would beg to differ. Have you heard of the paralymics
@@oliverhopkins8074 i have. I know they can run but not as quickly. Was being facetious.
I work in cybersecurity, and that statement is very true. When I started 15 years ago, small companies had teams of 10 to 15. Nowadays, large companies have 2 to 3 people on staff, and literally do not have the time to complete all the security issues.
So you’re saying this trend is also leaving larger gaps in big corporations’ cyber security?
Oh _boy._
@@OneBiasedOpinion planes are falling from the Sky, is expected that cyber security is also overlooked
Since the german federal railway (Deutsche Bahn) was privatized in the 90s, they have done this a lot.
They let their infrastructure rot, because their contract makes the state come up for replacments, but they would have to pay repairs themselves.
So now, 30 years later, the infrastrucutre is garbage and will take something like 60 billion euros to fix.
Sacrificed short term cot savings for long term productiviy.
And when it dies, the stockholders will simply invest elsewhere. If government attempts to revive it, the propaganda machine will sow rage about taxpayer money being spent, because that money is to be siphoned into corporate pockets.
Same with all the public infrastructure in the UK. Now we even get to drink our own p*ss because the water companies flush raw sewage into the water supply. Real nice.
Obligatory Scheisse Deutsche Bahn
It's even worse. The DB was not privatized. Not really anyway. But just in anticipation of it they stopped repairs etc.
Privatized or you mean public private partnership?
Only country to still have completely privatized railways is japan. No other country completely privatises railways.
Gotta love when someone works from the bottom up, just to slam the door behind them. Jack Welch is the definition of boomer mentality
So many boomers and those like them failed to realize their prosperity was a spike and one being sustained at the expense of the futute.
It's not proper boomer mentality to slam the door behind him unless he ALSO complains that they don't want to work into leadership roles anymore. It needs a vicious level of unaware irony to be properly boomer. Not that I doubt Jack Welch has that too.
AKA "I got mine, so fuck you"
Facts
People like that constantly talk about they were “self-made” completely neglecting the hundreds of people and institutions that helped them along the way
This mentality is why layoffs are probably going to become more and more common than what we’ve been seeing. It’s the epitome of enshitification: provides a large, short-term gain that you can ride the effects of for at least a year before the problems it created are fully evident. You can maybe juice another year out of it if you can blame the remaining employees or use the family card to get them to work harder.
Soon with AI there's no reason to hire so many employees
@@aslamnurfikri7640 I dont trust a single big investor to have anyone’s self interest in mind when it comes to AI. AI could be used for so much good potentially but not in this current work climate
Of course. This is how the capital class drives down wages. More desperate people means you settle for less and work harder, or get replaced
Worked for a few companies that thought that they were going to fire to profitability. Every time they did it, 6 months later they're re-hiring as stressed, distrustful and angry employees were packing their bags and work wasn't getting done. Cue the company rehiring, the shareholders get mad and demand higher profits, and the company lays everyone off again. It's getting so damn tiring, especially after getting caught in yet another layoff.
@@aslamnurfikri7640 Quite the opposite actually. AI sucks. And cant replace anyone yet (or ever, until we get to like human-like level intelligence, not fancy excel document). And also requires a lot of humans to keep it operational, stable and doing useful work (because in the end whatever AI is doing would have to be finished and VERIFIED by human).
Having a career in cybersecurity and related risk management, it is true that we're never praised for blocking/deterring attempts and always blamed for information incidents.
yep. it’s ironic how often execs and management throw around risk but never address it.
iam a business dude , iamma make sure that them stupid rule don't work at my place , hope i don't create more problems those
Get a good management team in place that can advertise your wins! I also work in IT (not specifically security, but what part of IT doesn't touch on security now?), and when management started explaining what almost happened and what we prevented or mitigated before it was a problem, and the weird hours we work to run fixes after hours while providing support for things during normal people's work day... Let's just say the embarrassment of being highlighted is a price worth paying for the grace we get when things don't go perfectly. It's a night and day difference in work culture, and made the board happier to give us more funding for better tools to make our lives easier. If your IT manager isn't also an IT evangelist, then they are a bad manager.
Sometimes it's the same in defenders in sports as well
Dude way too often companies try to push back on everything on the cybersecurity side and drag their feet on funding their cybersecurity.
The CEO will say they care about cybersecurity and data privacy/protection but often times internally companies do not care until they have lost a LOT of money because of a breach. Internal IT departments (if IT hasn't been outsourced) usually want to follow industry best practices if they can but they often do not have the C-suite and budgetary support to do so.
The short term thinking of shareholders is very real. I remember several years ago reading that Bezos having Amazon invest in it's own trucks rather than outsourcing all their delieveries to other companies and a lot of shareholders were extremely upset by this because they wanted more dividends. Couldn't believe how short sighted that was.
I remember so many people being baffled by Amazon "not making money" for so long, yet here we are where they are every other truck on the highway and every other delivery van. And all so people can buy cheap consumer goods from China.
Hmm...not sure seeing long term is great either...
@@johnchedsey1306 Yeah, chinese future is kinda screwed. "Wonder" (investors money) is running out, country build to cash out for a decade or two and then use money to rebuild what they had broken has no money to do so, and now escalation with major buyers... I bet india/mexico is next.
@@johnchedsey1306 That the goods are made in China isn't down to Amazon though. We don't have Amazon locally, but if I pick up any random product in any shop there is a high probability it will say Made in China on it. China is a capitalist dream as far as labour is concerned. It has labour laws like those that used to exist in developed countries where workers had low pay and no rights. It's actually funny that people think China is in any way communist. If it were the workers would own and control the factories.
Amazon, Tesla, SpaceX, and some others are good examples of what happens when a smart CEO plays the long game. People will hate them and that’s normal, but in the end they come out on top once their competition’s burned itself out with their short-term plans.
@@OneBiasedOpinionTesla has the highest rate of production error of any EV manufacturer, what kinda long-term strategy is that
Currently getting my MBA and all our classes are pushing us to focus on long term goals and encouraging innovation. They seem to be teaching us to do the opposite of what these disastrous businesses have done. So that's one good thing happening now.
Everyone knows that what they teach you in college is the exact opposite of what's done at work. So no. You'll still work on short term goals.
What part of the world are you located?
@@thegeforce6625 the U.S.
Maybe at your school it's like that, and I'm glad it is. But definitely not like that at all schools, I'm sure many schools continue to teach what will continue to feed the machine
Let's hope the Boomers don't stamp down that spark of hope.
In a university business class in which groups manage a fake company. Guess what we are graded on? Ending stock price. We are being taught to maximize shareholder value in school, how do we expect future CEO’s to perform differently
And then they get rewarded in bonus.
@@pedrob3953 very true, they are incentivized to do so
How many ceo of major companies come from a business school?
@@monsieurLDN certainly a good amount of them
Except irl there is no end date which you will receive a grade the company will continue on forever not just 2-3 years and long term thinking can be more profitable overall
So many people missed the point here, which is that reinvesting profits back into the business made for better results, better jobs, better quality, better overall profits, and actual stability. That was the model that made the US and its middle class prosperous. Believe it or not, some of us are still around who remember this system. Now everything is overpriced hot garbage. Soon we’ll be buying garbage washing machines that you assemble at home because the assembly line will be seen as dead weight that cuts into shareholder profits.
As the video said, the shareholder model is unsustainable. Eventually there’s nothing left to cut and nobody left to fire.
You get it. Sometimes the comment section goes off on a tear. Haha
Neoliberalism and its consequences has been a disaster for the human race
AS long as there are patents left and people to sue, the model stays sustainable - it just becomes an even bigger societal problem
it will be marketed with tagline 'customized for your life' with series of downloadable operating system upgrade purchases.
That's what happened on an episode of the Twilight Zone.
Private companies’ interests are often in direct conflict with the interests of customers and employees. This is how we got cheap disposable products being manufactured outside of places with solid labor rights.
He's talking about public companies. Private companies don't have to worry about a stock price.
Money is power, and power is a zero-sum game.
publicly traded but still private sector companies @@omeysalvi
It is in the interests of customers to acquire cheap products and it is in the interest of workers to work for a profitable company. All our interests are connected
@@doujinflipexcept no money isn’t a 0 sum game that’s the biggest economic misconception
“So we have two options.”
“Okay.”
“Option 1: we release the video game now. It’s broken and unfinished but we get money now.”
“Okay.”
“Option 2: we delay and release a finished high quality product. Though it’d take longer it’d certainly pay dividends and earn us more money overall.”
“…I want money now though.”
“… *sighs* option 1 it is then…”
How else is [insert AAA video game company CEO] supposed to afford his 17th yacht? He needs that money now, he can’t let that yacht depreciate in value.
There is a reason that young people (and people who are entering middle age) are souring on Neoliberal Capitalism. They have bared the heavy burden of propping up an oppressive system and have seen little fruit from their labors. The short term growth strategy has benefited the rich and the elderly and has made everyone else realize that the system is broken
I just read today about a billionaire that was going to buy hundreds of schools here in Sweden and focus on long term growth by focusing on the teachers and students not dividends. This tanked the stock and the other share holders pressured the seller to not sell the shares and blocked the acquisition. They cared more about the short term drop than long term growth. Support for private schools are dropping because of owners taking the tax money to pay dividends instead of investing in the schools so it may even turn out that private schools paid with tax money will be banned and then they will lose everything all for short term profits.
Good lord ...
Even if the billionaire in question is trying to be benevolent, schools owned and controlled by private interests sounds like a dystopian nightmare.
@@drunknihilism7181it's only a nightmare when those private interests mismanage the schools, which isn't often the case. There's a reason why private schools are usually so desirable.
This isn't a public vs private issue, it's a long term vs short term thinking issue.
God forbid the number stops going up for even a second
@@hugoguerreiro1078 Private schools are more desirable because the students are from wealthy families or they're religious and don't want scrutiny. Not because they're better managed.
Public schools are under funded and that, shockingly, leads to worse management. Then they have funds stripped from them, things get even worse and that's used as justification to transfer the rest of the funds to private schools instead.
I don't know about anyone else, but I personally don't think we should encourage stealing from the poor and giving to the wealthy. And there is zero reason to believe that businesses or faceless billionaires are more capable of planning for the long term than educators.
The current US rail industry is a great example of the pennies and steam roller. The infrastructure is so vast and needs constant maintenance. They can cut don't on maintenance a bit here or there and save money in the short term, but it will take a massive investment to return to normal, and will be more accident prone.
The Milwaukee Road is a good example of the short sighted cost cutting.
Companies will also trim and cut their ability to innovate, adapt, and find new business.
And now we have train crashes that lead to city evacuations
Do they not realize stoppage in shipments costs them more?
People forget that ensuring the company survives throughout various cyclical swings in the market, sustainable returns and growth without swinging wildly threatening layoffs, lost of reputation and ability to secure future talent market share of the industry basically far supercede any short term gains IS also maximising shareholders value. With the recent trend towards share price as a major KPI on whether an executive has done their job, is not maximising shareholder value, its profiteering at the expense of society.
All you need is to see into the future and you don't get burned really badly. Easy.
That doesn't guarantee any bonus. More KPI achieved, more bonus. Then when the sh*t hits the fan, you're already gone.
except like he said shareholders don't hold on for long term . they only care about short term and will sell the stock by next quarter.
Problem is the fed will just bail them out with cheap credit at the expensive of others savings accounts. There's no incentive for consumers or producers to be frugal and risk adverse.
No, it’s not “people” that forget. It’s the shareholders and financial sectors that forget that - and they are extremely incentivized to do so. Modern capitalism is a speculative vulture and nothing else.
Massive regulations, tax system changes and union power are needed to force another behavior from the owners. But we have seen the opposite - deregulations, tax cuts for the rich and union busting/weakness - not to mention the bizarre bailouts after 2008…
I always tell my friends my classic example of short-termism and why its so bad. I use Mcdonalds vs In n Out. Mcdonalds used to play such an active role in communities, giving teens their first jobs and giving seniors a place to still work later in life, they would hold community events with Ronald Mcdonald, pony shows, and lots of people showing up. So many people could attest to Mcdonalds being their first job. But as a public corp, they needed to constantly grow earnings, and you do that in two ways, growing revenue or cutting expenses. So for years they expanded everywhere in the world, introduced the cafe line of drinks, did all day breakfast, everything and anything to expand the business and grow revenue. But you can only grow so much, so they started cutting expenses by having less full time employees and more part time, and then introduced more automated menus and cutting staff to the lowest levels ive ever seen for them. And of course, the quality of their food has declined over time, at the same time the cost continued to increase exponentially. And then of course they are mad about minimum wages going up, not because they cant afford it, but because it cuts the earnings per share. They made $8.67 billion in profit last year, a 37% increase year over year, but they cant afford higher wages??
Conversely, In n Out is privately held, never felt the need to recklessly expand, has always paid their employees great wages, has many many more employees in each location than mcdonalds, has much higher quality of food, better service, and better prices, and has even raised their prices the least after recent minimum wage law increases. Annnd, look at the results, every In n Out you go to basically has big lines no matter what time of day you go.
In general i think In n Out represents what businesses used to be, and what most people running their own businesses would think; If you make a million dollars profit last year in your business, make a million this year, and make a million next year, you are happy because you covered all your expenses and still were really profitable. Heck, even if this year you only made $900k in profit, you still did well!
But in a corporation, a million dollar profit 3 years in a row is a failure without the growth %s the investors are demanding. And that leads to things like billionaire dollar profitable companies like Mcdonalds decimating their work staffs, and billion dollar profitable hospitals closing emergency room hospitals in major urban areas, because that doesnt help communities at all, it only helps shareholders.
I wish, and hope, this stuff starts getting out there more, especially since these huge corporations long since chased all the mom and pop stores out of markets and we are all just at the mercy of corporations and their lobbyists now.
It was eight years ago, i was working for zeven years and the company ceo said during a years overview that times would be tough, but they would increase the value of shares by buying them. And on that moment it didn't make any sense. If you have funds and you know times will be tough, there is a better way to spend it right? Left a year later, stock is now about 20% of what it was. Has seen two new ceo's since.
The key is to hire and fire enough ceo that they all become shareholders. This short the stock since they won't want to sell.
I just read “The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America-and How to Undo His Legacy” by David Gelles, which discussed the emergence of shareholder primacy at length. I thought it was a great book and interesting topic as someone who is just starting out in the corporate world. Glad to see a video on the topic, too!
The problem is it is almost impossible to put the genie back in the bottle now that it has been let out. Wall Street is absolutely addicted to short term thinking. Any CEO who tried to prioritize the long term viability of the company gets shit canned and replaced by someone who will destroy the company for short term profits.
@@yomanyo327there is already a distinction between short and long-term capital gains. Maybe the line (generally 1 year) needs to be changed - but as long as capital gains tax is lower than income tax, executives will always prefer compensation in stock options.
@@yomanyo327 How about cutting the Gordian knot and just remove the concept of shareholder altogether?
he didn't "break" capitalism he literally perfected it
@@Simboiss Say goodbye to 80% of people’s pensions then. If there was ever an idiotic idea in a youtube comments section, this is it.
The reason being is because of the institutions that make these CEOs. They pretty much collaborate with one another and influence other CEOs on how to play their roles to follow the "unspoken rule" and they're incentivized with "failing upward" with these golden parachutes.
Jack Welch was a pioneer in the vulture ceo field. American business hasn't been the same since
The Shareholder Value mindset leads to every company becoming the exact same company. Boeing, Apple, Exxon, Pepsico, Disney. Salaries and quality will always be as low as possible. Prices will always be as high as possible. Skills and roles are seen as interchangeable. Strategies and moves are the same high risk, cost-cutting affairs. Speculation and marketing is king.
The part where you actually do business is just a minor inconvenience.
Outside of the dollar signs and stock prices, this mentality has shredded the social contract between employers and employees. The current system is exploitive where companies just want to maximize productivity out of people in the short term, burning them out. We're all cynical, bitter and frustrated over our professional lives for the most part. Employees are expected to devote existence and be loyal ("we're family here!") but are immediately disposable. It's just not a healthy economic system and it's poisoning most aspects of our lives.
That is why the only people who should be able to "own" a company are the employees who put in the actual work. If someone makes money off of someone else's labor, they will always be incentivised to take a bigger and bigger cut. They are evil. They have never hidden it nor do they care to. Money rules our current economic and political system when it should be ruled by the will of the people.
The system was always exploitative. Pretty much any history book will show that to you.
@@TheSuperRatt In the 1950s it massively better. Most jobs offered generous pensions, hired people on the spot and paid enough feed a family suburban household on a single wage.
@@MVargica high school dropout could get a job as a janitor, work forty years at a rate of pay sufficient to buy a house, a car, get married and raise four kids, and take multiple vacations per year, then retire with a full pension. If that’s “exploitative,” sign me up.
I have heard that Ford needed to offer those wages and that work week because his turnover was so high due to simple, repetitive tasks being really miserable to do all day long.
And also because if he didn't, his workers would start getting ideas. Like, why are we struggling doing all the work while ol' Henry gets all the profit?
That dynamic never changed. It was just sidelined for a few decades by the social programs which saved capitalism from the workforce it exploits. But because capitalism is a relentless machine which only values immediate profitability, it has consumed those programs and controls as it does everything else. And so it will fall, incapable of understanding that it brought this upon itself.
@Frommerman I imagine he was getting the profits because he founded the company and took part in the inventions that made the company possible.
I'm not claiming Ford birthed the model T and its processes from scratch in his garage. But if anyone gets ripped off in these situations, it's the engineers and scientists who do the development work. Nothing would be possible without them.
As far as the workers' negotiating power goes, the reason they lacked/lack it goes back to Renaissance Europe. Honestly, it goes back to the Roman Empire.
Noblemen, like the estate holders they came from, slowly lost rights and control over the lands of Europe. But as the middle ages ended, they seized these rights and lands back.
This meant that when factory jobs came about, funded by rich utopians--invented by gentleman scientists--rather than by the defunct trades guilds or village associations, the people applying for those jobs had little personal property to fall back on if they got fired and no legal rights. That means no negotiating power.
Quit just generically bashing capitalism. The "exploited workers" have it better under capitalism than any other system. Surely there are areas to improve. But the best systems are still capitalism at their core.
@rightwingsafetysquad9872 There are plenty of people that capitalism excludes, and this current version is among the worst. You just praise it because you’re not excluded from it. At least not yet.
@@lucibelle Perhaps you can enlighten me then. But it seems to me that anyone excluded from capitalism would be excluded from any system.
Congrats on your impending 1 million subs award. 🔥
Thanks Scott, I can't believe you aren't closer yourself. Thanks for keeping us all accountable!
Oh shit, lemme help
@@HowMoneyWorks is that a compliment or a ridicule 😂
As a shareholder, it's more important to me that a company does not destroy its reputation, its employees' morale, put its customers in danger, or cause catastrophic environmental impact for the sake of increasing shareholder value. I want to own companies that are run by people who have souls.
Unfortunately the investment you make are probably so small that the line doesn’t even move
So no ceo will care
Ethical behavior is better for everyone and will create more benefit in the long run.
Sorry, you’ve been outvoted by the majority shareholders.
You're in a minority there. The average shareholder wants growth through any means necessary, and if someone else has to suffer; so much the better!
@@anonmouse15 some of these clown CEO’s destroy the company forever searching for their “shareholder value”. GE would be a great example
This nonsense is one reason why I have said for years that I would never go public with a company. Period. It is a deal with the devil. In the long term there is no way to reconcile the perverse incentives, and you get to keep your job or keep your soul.
I have gotten to observe the board of a small company for years now, and the shortsighted approach that dominates is appalling... but they don't care, they're all old and just want their payout. No reinvestment in the company has been made, no acknowledgement of the power of concentrated wealth over dispursed wealth. Absolutely surreal.
If these business ideas are vetted prior to starting up by a financial institution like #TDBank💳; then they could be stopped b4 any harm can be done... 🌎💘💰
I think the scary part of this concept of maximizing shareholder value over sustainability is that a large portion of the market(Probably close to 80% of publicly traded companies in North America), have been operating with this strategy for 3 decades now. It should have ended in 2008 but the entire economy got bailed out with 0% interest rates, instead of fixing the core issue. This pretty much gave execs a license to keep being idiots, and keep going into "unrealized debt" by penny pinching on key business initiatives that are critical to longevity.
We have hit a cross-roads in the economy where the "fruits" of all of this "unrealized debt" from maximizing shareholder value is coming due, and all at once. You can only imagine the absolute carnage that is going to reap.
If these business ideas are vetted prior to starting up by a financial institution like #TDBank💳; then they could be stopped b4 any harm can be done... 🌎💘💰
Hell, it’s about time.
A couple of years ago Darden restaurants did a 1 billion dollar stock buyback right before the price of beef shot up. When the price did go up, instead of charging customers more, they cut the hours of every worker and had them do multiple jobs at once. This lasted for like 7-9 months
Now all companies are encouraging employees to do the jobs of 2-3 people for 2/3s of a salary in a cost of living crisis
@The.QuasiOG The working poor have more experience with this than anyone, regardless if the stock market is involved. Walmart’s been getting subsidies for keeping their workers on food stamps for how long?
So they had to sweep some floors, bring food to some people. Poor babies. That's called working. If you hate your job, then get a different job.
@@kevinlue4756 🤡🤡🤡
@@kevinlue4756 I don't think you understand what doing the workload of 2-3 people actually means(for instance a closing that takes 3 people 2 hours after the close of business will take 1 person 6 hours. On top of the 8 hour shift they already worked to get to the close of buisness. I've done that, and I wasn't even done by the time the opening shift came in _because there's a reason why it's a 3 person job._ And that was just because of bad luck with one of other people being sick and the other becoming injured during the shift, we're talking about that kind of workload being expected as standard)
Or the fact that "working poor" means that people are working full time while not making enough to be over the poverty line.
In fact you come across as being completely divorced from the reality of what is being discussed.
This makes more evident why some companies produce bad products, launch incomplete product, and make minimal innovations.
Oh you don't know a tenth of it. People that claim govt is incompetent IMO have never worked for a private company.
Imagine buying a movie for 50 dollars. Every time you want to watch it, you need to insert a dollar bill in your TV. In the movie itself, there is not just product placement, but advertisment for extra scenes you can buy for only $19.99 each. You need to maintain internet access for watching the movie, although this is no streaming service. In a couple of years, tech service for the movie will end and you won't abe ble to watch it anymore. Sometimes, the movie just stops working at all. The screenplay and story is mediocre at best. This is the current reality for the triple-A video game industry of Ubisoft, EA, Blizzard-Activison and others. Increasing shareholder value destroyed 90% of electronic entertainment.
@@valentinmitterbauer4196 I don't understand why people keep buying their crap. I switched primarily to indie games like 10 years ago as soon as they started paid cosmetics. I played thousands of hours of games like terraria which I pre-ordered for $20 and has had dozens of massive free updates.
To some extent I feel like this is consumers fault. These companies are killing themselves, stop paying them and let them finish the job.
@@valentinmitterbauer4196 Who is making you buy the triple A games? You do realize it's people like you who preorder the garbage they put out that are fueling their decisions. Especially with gaming, since it's a luxury.
@@TunaIRL I do not preorder. I don't buy triple A. I play indie. You literally imagined a person to be mad at and projected that person onto me.
Management in public companies can have problems managing loose cannon shareholders and shareholder expectations. Even in closely held private companies, shareholders objectives evolve with different life stages (retirement for example). A local businessman inherited a medium sized manufacturing company with a
I mean it's helpful when the competition are screwing themselves over with short-term gains mentality and then flopping on quality.
Instead of giving all the money to the CEO and Shareholders, maybe spread the money with the people that made the actual goals possible. You know, to incentivize workers with positive reinforcement rather than the threat of job security that is slowly killing people. We have yet to learn how deep these consequences will run until a few generations down the line, we’re starting to learn about the impacts of generational trauma and how this is passed genetically.
The solution is hilariously simple, but will never happen, because it requires everyone on the planet to simultaneously stop looking for work until the requirements are brought back down to a reasonable level.
I like the thought, but allow me to make a better suggestion on how to deal with these standards and the CEOs being greedy bastards.
[REDACTED]
@@scruffopone3989 I guess Silverhand puts it best...
I remember hearing about Ford's difficulty with shareholders, and i'm glad someone with more expertise is making this connection.
There is a runaway trolley barreling down the railway tracks. Ahead, on the tracks, there are the trolly company's low and mid level employees tied up and unable to move. The trolley is headed straight for them. The company's executives are standing some distance off in the train yard, next to a lever. If they pull this lever, the trolley will switch to a different set of tracks. However, this will delay the trolly and cause the company's stock price to miss growth projections. They have two (and only two) options:
1. Do nothing, in which case the trolley will destroy the lives of the people on the main track.
2. Pull the lever, causing the company's shareholders to lose out on a half-percent of returns for that quarter.
Which is the more ethical option? Or, more simply: What is the right thing to do?
If they cant see the employees they would chose the secpnd option
@@heitorpedrodegodoi5646They seem to be happy enough to pull the lever even when they do see the employees. Some people just don't care about anything but their own wealth.
I see a lot of execs picking the third option; two track drifting. Why just destroy hundreds of lives when you could destroy hundreds of lives AND crash your stock price in the process
This is why I was investing in intel recently. Their CEO pat announced huge investments into capital for the future. The stock price tanked though because investors knew that meant earnings would decrease for a while while it was happening. Bottomed out at like 26-27 and then shot up to 44-50 recently. I thought the investors were stupid. I still think that.
Intel is sinking because they hid issues with 13/14th generation processors rather than try and fix it. The processors are also not as efficient as AMD they are also not sustainable in development because of transistor development issues that Intel has put off to keep costs down… they have been LAZY… and it shows.
This video rightfully highlights some alarming corporate practices. It's indeed a food for thought, how short-term gains are prioritized over long-term, sustainable growth.
That judge siding with the minority shareholders was the most morally questionable, most unfair and most consequential decision ever handed down in corporate history.
It was an entirely correct decision.
@@Peter.F.CIf these business ideas are vetted prior to starting up by a financial institution like #TDBank💳; then they could be stopped b4 any harm can be done... 🌎💘💰
Why was it the correct decision to say the CEO can't do what's best for the company? @@Peter.F.C
It is not a question of what's best for the company. Not even clear what's best for the company might mean.
The objective is to increase returns to shareholders. But not one group or one shareholder at the expense of others.
Stealing shareholders money and giving it to someone, even if they happen to be a shareholder, is something that a court should not allow. @anna-flora999
@@anna-flora999hes probably a corporate bot, or a loser, ignore him
You could make a corollary channel called “How Money Should Work” where you highlight examples past or present of companies doing things in a more right or ideal way, and what widely shared benefits that produced
great idea tbh
Karl Marx wrote a book about that once. Very divisive topic, it turns out
@@Aighthandle im thinking much more about the American economy in the period of 1940-1973, where companies had finally turned from their Guilded Age ways and gave a lot of ground to their workers on things like worker pay & benefits, unions, & reasonable executive salaries, and when substantial U.S. Gov investment drove innovation & infrastructure. Democratic capitalism, if you will.
Or at least a series on it within the normal channel. AMD since Lisa Su took over seems like a good potential candidate for something happening recently. Older companies would be cool too
@@ryanevans2655I think you're forgetting that that particular time period, was disastrous for other countries. A lot of the accumulation of wealth in America, the proliferation of certain goods, was only made possible because of truly evil actions. An example of which being the pillaging and ravaging of Latin America (subversion of democracies, banana republics, coups and installation of fascist regimes). American wealth is, and always was, built on the backs and blood of foreign peoples. As someone descended from a victim of American economic imperialism, I stand staunchly against that.
The dutch IRS offered all employees a golden handshake when they left voluntarly. The most valuable employees left and more than anticipated and not valuable employees stayed behind. A few years later the IRS had a huge shortage of employees which are still slowing tax collecting decades after the incident.
What is a golden handshake
@@yonizaslavsky4246 A very royal package to terminate an employment.
I’m guessing the equivalent of a “golden parachute”.
@yonizaslavsky4246 "goodbye, take that money"
"You see where this line on the graph meets this line on the graph? That is why the poor should starve."
And absolutely no more nuance than that, huh?
@@mrfattypancakes even if nuance exists, the main point of exploitation for the sake of line go up is a problem.
Have you spent any time around the super poor? I'm not saying anyone should starve, but they make themselves pretty damn hateable.
I call it spreadsheet induced psychopathy.
@@rightwingsafetysquad9872have you spent any time understanding the systemic causes of poverty? Every individual is a group project and most of the poor represent a group failure.
Those things you hate about the poor are most likely byproducts of group failure. If we put you in their position long enough, you would likely begin displaying many of the same qualities. You might be surprised to learn what cPTSD, chronic sleep deprivation, malnutrition, and long term exposure can do to an otherwise functional and ordinary person.
1:24 Imagine losing the moral high ground to Henry Ford
And that explains why so many corporations try to bend the political establishment towards unsustainability too. For the same short term ambitions.
There I was, studying Business Administration at the best university in Latin America, when I had the Dean of my college (who was also one of our teachers) saying that the role of a company is to maximize shareholder value and showing me that the world I was getting myself into was not one I was going to enjoy working on nor would I agree with 🙃
It was a sad realization...
Which BA school is that?
Faculty of Economics and Administration - University Of São Paulo
You're studying business in São Paulo mate, what did you expect?
@@lucasabaraujohonestly not surprised its in brazil, hope your study at least help you
This is exactly why I'm suddenly scared to fly or ride Rollercoasters. Corporations only care about making more $ and again not paying the very ppl that RUN thier business. And if you don't make decent money at your job. You know those workers don't care. Can't blame the workers either
I love that new word first time I've heard it. " ENSHITIFICATION" , I'll use this now. 😊
Misuse of a comma.
Watch Cory Doctorow
@@AwesomeHairo call the youtube police! Oh dear!
The term was coined in 2022 for the downgrading of online platforms-increasingly cutting corners & screwing their users/business customers to milk short-term gains for investors-. I've also seen people use it to refer to how AI, SEO/algorithm abuse, etc. have hurt the Internet in general
The biggest problem: Convincing people to stop doing this is impossible. Business will go bankrupt in 10 years? Just Find a new business. People hate the lack of quality? Find a new business. Government shut it down? Find a new business. It's predatory, destructive, cruel, selfish, and doesn't plan for the future at all, but as long as they are profiting, they won't stop.
How to fix businesses and corporations:
1) Companies are not people and do not have the rights a person has. They cannot have limited liability or form contracts. Your contract is with a human representative.
2) Companies cannot own land. Only living American citizens can. A human's name must be on the deed. They are responsible for what happens with their land.
3) If a company commits a crime, its punishment is distributed among its owners/shareholders in proportion to their shares. They are responsible for their behavior.
Every time stuff like this get covered, I just realize that shareholders are just like gambling/ drug addicts that want a quicker and bigger hit. They don't care who they have to sell out to make it happen.
This video leaves out the fact that the main shareholders that brought about these "profit first" laws were the The Dodge Brothers. Ironic how Dodge's greatest vehicles were the Demon and the Viper, because these two were exactly that, a snake and demon.
As someone who is passionate about investing I wish companies would just focus on fundamentals and let the share price reflect their (real) growth as a company overtime.
(I also love dividends but would rather know a company is well managed than get a temporary dividend that makes the holding less secure.
Lmao. They'll never do that. They literally can't. They ate the only systems which sorta made them do that for a few decades, just like they eat everything else.
They'll eat you, too. They're already doing that though climate change, but more directly as well. Companies and the system in which they exist are incapable of seeing you as anything other than numbers. Some amount of labor which can be extracted and directed into the pockets of your *betters.* Some amount, to be minimized at every turn, which you require to scrape by. Some amount required to distract you, make you think any of this benefts you. That's all you are, to the things you invest in. A crop, to be harvested.
I once had a training period where I was given a document with tons of jargon I didn't understand to sit and read for an entire week while almost nobody talked to me and then pushed onto a team of already busy people that were also supposed to train me as I immediately started taking projects. I hadn't even been given credentials to log into any systems, so I had to have one of them create a new IT ticket any time I had to do something new.
the fix is simple, pay the management team a meager base salary, and have the rest of the compensation in shares that vest in 20 years, that way their incentives really do align with long term shareholders
I mean, it would probably need to be a bit more than a "meagre" salary (I'm expecting big bosses to want to be paid well), but incentivising them with long-term unvested shares is a great idea.
That... sounds like a really good idea. They won't apply it, im sure. But sounds like a great idea
The problems listed don't seem to have anything to do with the maximizing shareholder value model. In fact, most of these are explicitly the opposite: using various tricks in order to hide the actual performance of the company from shareholders. Brand and reputation doesn't show up on the balance sheet (except as part of a merger), so, yeah, you can make your numbers look good through extracting earnings (numbers that do show up) by ruining your reputation (numbers that do not show up). However, this is obviously not in shareholders' interests.
The problem is that the stakeholder model also has enormous issues, in that it essentially gives management leeway to do whatever the heck floats their boat, with no real oversight.
Underrated comment
It does have a lot to do with maximizing shareholder value, as you laid out. Reputation doesn't show up. It doesn't influence shareholder value from the point of view of the shareholders in charge.
@@anna-flora999 ruining your brand and reputation will cause profits to go down in the future. That does impact shareholder value.
Agree 100% .. and anyone remember Sears and Roebuck...
If these business ideas are vetted prior to starting up by a financial institution like #TDBank💳; then they could be stopped b4 any harm can be done... 🌎💘💰
Bot @@jonnovember2136
What we need to keep in mind is:
Private Equity has several companies that sell nothing but 'efficacy.'
This concept, which is just 'Maximizing Share-holder Profits' misnamed so people think it is good, is being marketed to board members of other companies. Due to the fact these consultants cost the company quite a bit of money to do their 'inspection and report,' they are often listened to regardless what that advice is... Loss-Sum. That the advice does make the stock prices go up too, it can seem like it is bringing success until the company realizes it's coffers are broke, it's workforce depressed, and it's customers demanding their concerns be addressed.
Boomers experienced working for companies that reinvested back into themselves, and as soon as they got themselves in charge, abandoned that strategy in favor of appeasing shareholders. And now they want to lecture us on how things were better back when they were "on their way up" the corporate ladder.
Only a tiny percentage of boomers has ever been in charge. Don't blame an entire generation for the crimes of a small handful.
Employee owned coop companies seem to be the best idea to me. Employees generally want what’s best long-mid term to keep a stable job which is generally also good for the customers.
Happy employees make better products and have better customer service
I think utility companies need to be federalized and have their board of directors elected in rank choice government funded elections. All the fun things can operate however, but we need to get extortion out of the market. People need access to preventative and restorative care, education, food, water, basic shelter and some form of telecommunication to keep a job. We need to elect the people who control these things, so they're beholdent to the voters and we know what we're voting on, instead of the senate who manage foreign policy, and medical access, and large environmental regulatory changes, and finance and media, and etc. etc.
Have you looked at the German system, codetermination and workers' councils?
Maybe CEO should have full legal responsibility for company failures...
Hence why we need a new metric to measure performance that does not just include return on investment or stock prices.
Odd idea, but hear me out- scandals/per year. The less massive public incidents you have the better. Of course this wouldn’t stop people from burying things under HR but it would at least stop them skimping on safety regs.
Ideally, they’re be an internal one as well for anything that did go wrong and that they did bury-you’d want that close to zero as well.
There are investment groups which apply ethical and sustainable practice standards to assess whether to invest in a company. They tend to outperform the market. Some share their criteria.
Criteria can include possibility of shareholder activism improving actual performance as conditions change. I know of one which held shares in a destructive company for a time, in order to attend annual meetings and put motions seeking improved behaviour.
Issue is that as soon as a metric becomes a goal, it becomes useless. People will figure out hacks and gimmicky business structures that make important number high without actually doing the things the number is intended to represent. For instance, to avoid the issue of public scandals, a business may move its manufacturing base to a country with poor workers rights and safety laws, or hire undocumented workers who can’t safely report safety issues without risking deportation. They might lobby local government to relax or subtly rewrite safety laws, or if they’re big enough, simply threaten to leave if the local authorities raise a stink. They might also “sponsor” media institutions, which are constantly whining about lack of cashflow, and create a perverse incentive to prevent journalists reporting on screwups. Hell, they already do all these things, they’d just do it harder.
I think at least part of the solution will be to chance the way people think about money and business, and require more transparency. Also stop hiring pillocks as CEOs, give them some reason to care about long term performance of the companies they run so they don’t just come in, fleece all they can, then drop out before the rest of the world realises how much they’ve torpedoed the business.
Essentially, we live in a system where the people who actually do stuff get fired or suffer pay cuts to give idle rich people even more money they don't need and hoard the bulk of it.
And they pay lower taxes on that income because capital gains are taxed at a lower rate than earned income. The tax code literally rewards you for not earning your money.
This subject has been one of Simon Sinek's primary talking points for years. Glad to see the idea catching on!
Don't forget Milton Friedman literally influencing business leaders, government and economist to promote shareholder value and neoclassical economics
Last year, I was working full time, budgeting groceries, unable to afford date nights, and missing time with my kids. Now I learned how to make money online. Now am a SAHM, homeschooling, and making profits every week.
Frankly I feel if we can start by reversing course on this mindset, we can directly or be on the way to solving most of society's problems.
Maximize the path that makes the company profitable, but most importantly, that ensures the company is still alive and kicking 100 years from now
Toshiba is going down the same route, sadly. Last year a handful of companies get together and bought majority.
Now most people think the new shareholder will carve up and sell the company, with their first scandal up in the air earlier this year.
Sad ways a big business to go.
It comes down to what I say to my friends and family all the time. 'Sustainability' should be the motto of this century and the following.
Welch's "vitality curve" has destroyed so much in company and personal lives.
Is the stock market actually getting better or is this the regular market manipulation to entice new investors, I'm currently sitting on an inheritance of 300k and i'm wondering do I invest in stocks or Gold?
Even while $300k mightt seem like much, one bad decision might seriously deplete it. As such, exercise extreme caution in where and how you invest. It is advisable to diversify while retaining 70-80% in secure investments. Along with your budget, you should think about financial advising.
Its unclear which stocks and sectors will lead the market in the next uptrend. Stay away from rebalancing if you do not have giudance from a plannner and invetsment strtegist. My finances have been in order since I got a wealth planner like Monica Mary Strigle working with/for me.
I would like to reach your coach but how? because I'm seeking for a more effective investment approach on my savings
The decision on when to pick an Adviser is a very personal one. I take guidance from ‘Monica Mary Strigle‘ to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
It's good you make your own research. and make sure whoever you work with is licensed n verifiable with a repute, this monica looks the part but i'd do my due diligence. I set up a call, tnks.
Thanks for the awesome videos and all the amazing content!!
Glad you enjoy it!
The explanation I learned about Ford many years ago, was he increased the daily wage to $5 to create more Ford customers. That is, he raised wages to the point where his own employees could afford to buy Ford cars. He increased wages to increase the market for his products.
Shareholders and investor's are ruining gaming too. All the studio closures and layoffs of late are due to them demanding higher profits from their studios. Dangling bonuses in front of CEOs and managers as a reward for obedience certainly doesn't help either.
It's like they really run the company.
Unfortunately, it's not even a choice for businesses to deviate even if shareholders are on board with long term growth. High Wall Street valuation means affordable access to equity through direct stock sales and collateralized loans. If you don't play Wall Street's game, it's difficult to gain access to the funding to make long term investments, especially since all your competitors will.
The ability to make money just from having money and moving it around is the biggest "it's a feature not a bug" in existence
Exactly. Some people really think that it’s good thing that people can generate more wealth by doing less and easy work then by doing important and hard work like construction, sanitation or first response.
I can’t believe some people think that people born from rich parents that got rich from investing their inheritance should have a higher standard of living than a firefighter or paramedic!
finite investments demanding infinite returns is so ridiculous it is shocking that it is just generally accepted, of course this 100% ensures companies and services get shitier over time
The silly part about shareholder first management is that shareholders are supposed to be the last puppy to the bowl. These corporations are treating shareholders like they are bond holders. Stock is a long term investment and unfortunately it’s not being treated as such with this management strategy, and ultimately it leads to much more volatile economic cycles due to constant over evaluation. The video anthropomorphizes this as picking up pennies in front of a steam roller, but I prefer the term “stepping over old dirty dollars to pick up shiny new pennies”
It's stuff like this that makes me want a law that people in progressively higher positions in a business must at least know how to perform every task in their business' daily functioning that their subordinates do, even on the lowest level.
Is part of this thesis that, in a lot of these cases "the shareholder" refers directly to Blackrock/State Street, so it's a bad idea to attach incentives to these giant investment funds ??
Or, you pass a law to allow for the courts to appoint replacement CEOs when the current CEO is trying to maximize shareholder profits, and you in turn make sure that the king who is appointing said judges cares more about the general welfare of society than maximizing profits. I say “king” because you basically need that kind of system.
Risk management team members have a unique position at most corporations, and must maintain a delicate balance. Revenue-generating teams see them as "obstacles", while the Risk teams are constantly trying to prove their worth. It's easy to see quarterly fee income increased by 10%, but not so easy to see that 10,000 account takeover attempts were thwarted in that same time period.
Captail gains is taxed less then income right ,so probably the motivation for stock options . You just take loans out on stock infinity money glich.
3:10 lmaoooo we really need to hold judges to higher standards. Because that was a MASSIVE fuck up.
3:10 That was Dodge's logo back then? It explains the book Ford wrote.
So close to 1 mil subs!
So basically, I've been 100 percent correct this whole time, when a company goes public it's 100 percent proof that the company is being run poorly
I don’t know, but it definitely will be.
Every company is a ticking time bomb. Ones that go public and just massively shorten their fuse in exchange for a quick buck. With private at least you get a chance to not have a short-term maximizer take over, with public it is almost guaranteed to happen soon as shareholders can possibly force someone who will give them more money in the short-term onto the company.
First step to changing things, is education. This is the video that does that.
That's why equity investors buy businesses to bust them out. It turns the entire economy into a giant bubble. Shareholder value is mostly increased by hype.