Big Picture
November 23rd, 2009My common fault of public companies is that the focus shifts to the next quarter, the next dividend, keeping stockholders happy. And so they should.
Yet…
What is the bigger picture? What are you working towards? A little less in shareholders hands this year could be magnitudes times more in five years.
It’s these big picture perspectives and long term plays that really pay off. Bill Gates was for years saying Microsofts aim was to get a PC in every household. Now that is virtually true.
If they had focused on the short term, forgetting the big picture, they would have ended up with mediocre results.
Great companies think big for the long term.
(And your Marketing should reflect that).
Tags: big picture, long term, marketing, short sighted, short term
This entry was posted on Monday, November 23rd, 2009 at 6:39 pm. 
November 30th, 2009 at 7:49 pm
Ben you’re right about the focus of the investor being about the quarter rather than the big picture long term investments. Long term investing began to die out during the 1980’s and although lots of money managers out there today would love to let people think that long term investing is the only responsible way to invest we have recently seen many fortunes lost and a lot of once in a lifetime opportunities missed by staying the course in those long term investments.
A little history about this and you’ll be able to understand why this change has come about. Historically banks and funds were pretty much the only entities connected well enough to the markets to be able to trade in and out rapidly. Swing trading and day trading have been around for a very long time but not generally accessible to you and I; unless we wanted to spend our days at a brokerage house. Even at that the brokerage fees would have killed us unless we were trading huge sums of money. Once the Internet came along the markets became “democratized”. Small startup brokerages and large established brokerages were able to handle many more transactions daily due to Internet connection, computerization and a resultant lower overhead. All factors that have allowed greatly reduced transaction fees. Most online brokerages offer it’s members a real time feed to at least one of the major markets (in the U.S. L.A., Chicago, New York are a few) and trades can be made within seconds from the comfort of your living room as often or as little as you choose.
I think it is part of our natural condition that we are drawn to those things that were once relegated to the few especially if there is a profit to be made . Being able to trade in and out of stocks by the masses creates the condition for pubic companies to pay much more attention to the bottom line during any current quarter since poor performance can spell sudden decreases in stock prices (notice I don’t say value) due to the reactions of a large volume of small investors exiting apparently unproductive investments. Add to that the natural cycle created by the banks and hedge funds (they’ve adapted and act very similarly) and you’ll create some real volatility. The blame, if there truly is any, rests with accessibility which has created, I think, a more dynamic market.
December 15th, 2009 at 6:56 pm
@Jim Thanks for providing some context for us all, very much appreciated, the short term focus doesn’t bode well for public companies though.