10-21-08 - 2

Widespread stock ownership is destroying American corporations. The idea of corporate governance is that the executives work for the benefit of the stock-holders. That works well when the stock is held by a few magnates, like JP Morgan or Carl Icahn or Warren Buffet, they actually know what's going on, they can see when the CEO is raping the company and taking the profit for himself, but when the stock is owned by a million grannies with 401k's, they have no idea WTF is going on and the idea that they are holding the executives responsible is nonsense. It allows companies to be less transparent, to get away with more, and for incompetent executives to keep bouncing from job to job. Obviously there're advantages to having a liquid market where you can be evaluated by your merits rather than by the whims of someone like Morgan, but I contend that the market would function better if the minimum stock purchase was $10,000 or so. Stock analysts actually did honest due dilligence back when they were primarily doing analysis to make purchases themselves (with their bank's capital). When they started just pimping stocks for the public to buy all connection to reality went out the window.

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old rants