[geeks] (Almost nothing to do with )Carley Fiorina

[Greg A. Woods]

[ On Tuesday, December 3, 2002 at 05:53:35 (-0800), Lionel Peterson wrote: ]
> Subject: Re: [geeks] (Almost nothing to do with )Carley Fiorina
>
> --- "Greg A. Woods" <woods at weird.com> wrote:
> > 
> > [ On Monday, December 2, 2002 at 20:27:43 (-0800), Lionel Peterson wrote: ]
> > > 
> > > --- "Greg A. Woods" <woods at weird.com> wrote:
> > > > 
> > > > [ On Monday, December 2, 2002 at 20:27:43 (-0800), Lionel Peterson wrote: ]
> > > > > 
> > > > > You really seem to be talking about bonds, not stocks...
> > > > 
> > > > I suppose it depends on how you define each term.  If a bond buys
> > > > stock in a company then what is it?  (yes I'm purposefully
> > > > fuzzying up the terms here -- I don't want to discuss these
> > > > issues within the confines of the current terms of reference
> > > > used by the financial community :-)
> > > 
> > > A bond is a financial instrument that allows an individual to
> > > assume some risk with an investment, and to be rewarded for that
> > > risk with a "guaranteed" rate of return.
> > 
> > Now there you go again.  Didn't I just say I'm purposefully making
> > the terms fuzzy here because I don't want to discus these issuess
> > within the very narrow (minded) confines of the current definitions
> > used by the financial community?
> 
> Greg - you asked me how I define "bond", or at least based your
> reaction to my statement on how *I* defined each term... I tried to
> give you my definition for one term, and you jumped up and down about
> it... Please believe I was not trying to provoke or upset you - I was
> attempting to discuss an idea with you. 

OK, well I guess I can see how you could interpret my rhetorical
question as a desire to learn your definition of the term.  However my
intent was to go back to your statment positing that I was talking about
bonds and not stocks.  I.e. the intent of my rhetorical question was to
show that I was talking only about the generic investment of capital
funds into businesses such that the business has the cash to operate and
that in return the business will pay some kind of return _and_ that the
original investment can also be repaid, or sold to another investor,
just like a loan _or_ like shares.  Whether the dividends paid in return
are guaranteed or are based on some formula related to periodic profit
and loss calculations, is irrelevant.  What's relevant is that dividends
be paid if and when the contract with the investor mandates that they be
paid.

For example if I had bought shares in any profitable company, such as
Micro$oft, I would fully have expected to be paid dividends by now
representing the profitabilty of the company.  Micro$oft's shareholders
have been duped in the worst possible way, and the financial system has
been quite happy to help Micro$oft do the duping.  I have no idea what
M$'s yearly operating budget might be, but I'll bet it's a rather tiny
fraction of their cash reserves.  That kind of accumulation of wealth,
especially done in the way it was done, should be a criminal offense.

What's happened to investors who threw their money away in less
successful technology companies is more along the lines of what should
be expected, though unfortunately it's not regulated and as a result
there were still a few people who basically stole a whole lot of money
from both unsuspecting investors _and_ from the tech companies in
question.

I think share prices should be regulated to match the capital value of a
company.  Such regulation might work like this:  When a company loses
money then the value of its shares decreases.  When a company makes a
profit though then some of that profit can be put back in as capital
investment and/or kept as cash reserves and as a result the value of its
shares will rise; but the rest of that profit _must_ be paid out as
dividends.  To keep share trading viable in some minimal way the
regulations might allow sellers to sell shares at at a small amount
above or below market value -- BUT that would not change their true
value, the buyer would simply have paid slightly more (because he or she
perhaps really wanted to own a stock in the company in question and was
willing to pay a premium for those shares), or if he's lucky then less,
than their true value (in the latter case perhaps because the seller
really didn't want to own a stock in the company in question, or needed
his cash back, and was willing to give up the shares for slightly less
than their face value).  Financial analysts today already talk about the
true value of a company and compare that with the current market value
of its shares.  What's missing is the regulatory control to ensure that
corporations don't go nuts over the market value of their shares and
start doing stupid things that ultimately kill their true value, and
also that companies don't dupe investors into paying far above market
value for shares and then wasting that capital investment in totally
unaccountable ways.

The stock market as it is run today with so little regulation is no
better investment than any casino on the Las Vegas strip.  Some who play
it can make big winnings, but lots lose even more, and it's the guys in
the back room, the Carley Fiorina's, who walk away with much of what the
little guy loses.  Not a democratic way to accumulate wealth if you ask
me.

So, to come full circle back to Carley Fiorina and whether she typifies
a good corporate leader:  I still don't think so.  She fought directly
against major shareholders, subverting their will, pitting a mass of
small investors against them by use of propoganda and what we might even
argue were outright lies.  Is the company she's created as a result more
"valuable" than the sum of its separate parts?  I doubt it.  The
remaining shareholders might currently have more on-paper value for
their shares (which is arguably why she did what she did), but that's
obviously not what I'm talking about.

-- 
								Greg A. Woods

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