Short-Termism Is Harming the Economy?(wsj.com)
wsj.com
Short-Termism Is Harming the Economy?
https://www.wsj.com/articles/short-termism-is-harming-the-economy-1528336801
70 コメント
> which is good for day traders
So, for common folk? Or do they mean people, who do it professionally?
So, for common folk? Or do they mean people, who do it professionally?
Professional day traders.
https://en.wikipedia.org/wiki/Pattern_day_trader
And usually when day trader is referred to in the financial industry, what they really mean is a professional trader that moves high volume for one person (you can technically be a pattern day trader at relatively low volume).
https://en.wikipedia.org/wiki/Pattern_day_trader
And usually when day trader is referred to in the financial industry, what they really mean is a professional trader that moves high volume for one person (you can technically be a pattern day trader at relatively low volume).
Day traders are people who trade the same equity within the span of a single day, basically, or that’s the definition at a brokerage. If you were to flip an equity a couple times in a single day often enough, you’ll be labeled a “pattern day trader” and you will be legally forced to maintain a minimum balance of $25,000.
Someone correct me if I’m wrong.
Someone correct me if I’m wrong.
Isn't that only if you have a margin account but cash accounts aren't required?
A CEO at a company I worked for decided he wouldn't provide guidance anymore because he felt it was damned if he did or didn't. He noted that at the end of a conference call.
Stock dropped like a rock the next morning as if we were sure to close up shop or something the next quarter because we provided no guidance.
Even better the following quarters some silly stock people put out notes that we missed the predicted numbers. The numbers, they just made up their own predictions, and put that in the press release where they used to note guidance we used to provide.
Stock dropped like a rock the next morning as if we were sure to close up shop or something the next quarter because we provided no guidance.
Even better the following quarters some silly stock people put out notes that we missed the predicted numbers. The numbers, they just made up their own predictions, and put that in the press release where they used to note guidance we used to provide.
> because he felt it was damned if he did or didn't. He noted that at the end of a conference call.
Why would he be damned if he does? Because he knows things don't look good. In that case, it makes perfect sense that the stock drops like a rock. Am I missing something?
Why would he be damned if he does? Because he knows things don't look good. In that case, it makes perfect sense that the stock drops like a rock. Am I missing something?
IIRC, he felt like if he was honest and good at calling the numbers, wall street said it wasn't that great because they didn't exceed the numbers much if at all.
Then again if he played the game and played down expectations stock would drop just on that prediction and wall street's own made up numbers never adjusted to his predictions anyway.... so things would at best be flat.
Generally he was just tired of it all I belive. This was after the .com crash and they had weathered that really well compared to many companies but also this was the time when Wall Street was turning into "short term lots of growth only please" kinda folks and our company was plenty profitable but never going to grow massively.
Then again if he played the game and played down expectations stock would drop just on that prediction and wall street's own made up numbers never adjusted to his predictions anyway.... so things would at best be flat.
Generally he was just tired of it all I belive. This was after the .com crash and they had weathered that really well compared to many companies but also this was the time when Wall Street was turning into "short term lots of growth only please" kinda folks and our company was plenty profitable but never going to grow massively.
Interesting. I've heard some people say that the M.O. for wall street these days seems to be:
- during earnings provide extremely positive guidance for next quarter. this will bump stock up
- as time goes by, slowly update your guidance downwards. if this process is slow, hopefully stock won't be very affected. repeat this until you're convinced that your public updated guidance is below your private earnings predictions.
- when earnings come, you'll over-shoot your depressed guidance. This will bump stock up. Again, provide extremely optimistic guidance for next quarter.
- during earnings provide extremely positive guidance for next quarter. this will bump stock up
- as time goes by, slowly update your guidance downwards. if this process is slow, hopefully stock won't be very affected. repeat this until you're convinced that your public updated guidance is below your private earnings predictions.
- when earnings come, you'll over-shoot your depressed guidance. This will bump stock up. Again, provide extremely optimistic guidance for next quarter.
I understand your frustration but you can still miss the consensus from analysts. Analysts are paid to give estimates for future price, earnings, sales and so forth for the next few quarters.
Yeah, the company was not missing "the estimates" - Wall St. "analysts" guessed wrong.
I hate how consensus analysis turns out like a dictat from the high priesthood - you must jump this high even though you forecasted something completely different.
I hate how consensus analysis turns out like a dictat from the high priesthood - you must jump this high even though you forecasted something completely different.
On the other hand they published predictions earlier that way shortly too high. In that case those false expectations boosted the stock. So maybe it evens out?
Guess who has those "estimates" and slip them to their investors before anyone else?
The problem is one of informational asymmetry to reward the connected/wealthy.
The problem is one of informational asymmetry to reward the connected/wealthy.
Even if companies publish their own guidance, Wall St. analyst consensus does not necessarily match, and you can miss on those expectations you did not set anyway.
so.. what happened in the long run?
Company chugged along like they normally did until being slow to adopt new tech caught up to them. The CEO and his buddy the CFO lined their pockets as you would expect until someone bought the company.
But they were solid earners until then as they had put themselves in a good spot and provided outstanding service (well that was me and my buddies). Stock never did much as wall street was entering the phase of demanding short term growth for no apparent reason all the time.
But they were solid earners until then as they had put themselves in a good spot and provided outstanding service (well that was me and my buddies). Stock never did much as wall street was entering the phase of demanding short term growth for no apparent reason all the time.
I wonder if these two big guys with lots of analytics power at their fingertips have a vested interest in this. I might be wrong but doing something like this might create information asymmetry where one guy knows better than the other where the next numbers are going to land.
The pressure to meet short-term earnings estimates has contributed to the decline in the number of public companies in America over the past two decades.
Anyone know paper/article which provides evidence for this? My assumption is that the number of public companies is lesser more due to consolidation is various sectors.
The pressure to meet short-term earnings estimates has contributed to the decline in the number of public companies in America over the past two decades.
Anyone know paper/article which provides evidence for this? My assumption is that the number of public companies is lesser more due to consolidation is various sectors.
You must not be familiar with who Buffett is. He is basically the antithesis of a trader with "analytics power at his fingertips" (by which I assume you mean computing power). He prefers to make exactly one trade per company: buy a great company and own it forever, preferably by buying 100% of the company in cash.
He is a tireless advocate of stock prices reflecting actual value of the company (and his modus operendi is to know the actual value and buy great companies when they are at a substantial discount to it). He split BERK into BERK.A and BERK.B when the stock price got so high that people were speculating on it and it no longer reflected the intrinsic value. He doesn't say what the intrinsic value of BERK is, but he reports book value every year and has a standing order to buy if it is 1.2X book value or below, which puts a floor on what he thinks the intrinsic value is.
He also strongly believes in management thinking long-term instead of short-term, and frequently says so in his shareholder letters. This is entirely consistent with his philosophy. If you want vested interest, his buy-and-hold strategy does best when management considers long-term growth rather than short-term manipulation. However, he thinks it is better for shareholders in general, not just himself. Given that he's giving away all his stock after he dies, which can't be that many years from now, he isn't doing this for monetary gain.
He is a tireless advocate of stock prices reflecting actual value of the company (and his modus operendi is to know the actual value and buy great companies when they are at a substantial discount to it). He split BERK into BERK.A and BERK.B when the stock price got so high that people were speculating on it and it no longer reflected the intrinsic value. He doesn't say what the intrinsic value of BERK is, but he reports book value every year and has a standing order to buy if it is 1.2X book value or below, which puts a floor on what he thinks the intrinsic value is.
He also strongly believes in management thinking long-term instead of short-term, and frequently says so in his shareholder letters. This is entirely consistent with his philosophy. If you want vested interest, his buy-and-hold strategy does best when management considers long-term growth rather than short-term manipulation. However, he thinks it is better for shareholders in general, not just himself. Given that he's giving away all his stock after he dies, which can't be that many years from now, he isn't doing this for monetary gain.
"He prefers to make exactly one trade per company: buy a great company and own it forever, preferably by buying 100% of the company in cash."
I don't think you've paid attention to what Buffett does to make money in the last decade or two. He targets companies that are or may be desperate, and tries to exchange his endorsement for things like preferred stock and warrants at unbelievably favorable terms. He did this with Goldman Sachs during the financial crisis. He tried to make a deal with Uber recently. He is absolutely nothing like the folksy myth you reference.
I don't think you've paid attention to what Buffett does to make money in the last decade or two. He targets companies that are or may be desperate, and tries to exchange his endorsement for things like preferred stock and warrants at unbelievably favorable terms. He did this with Goldman Sachs during the financial crisis. He tried to make a deal with Uber recently. He is absolutely nothing like the folksy myth you reference.
You're factually mistaken. The extreme majority of his activity the last 15 years has not been taking advantage of weak companies and lending his reputation. He lent several massive financial entities money and his reputation during the fallout from the great recession, which helped those companies a lot and he made money, a great win for both parties.
Bank of America and Goldman Sachs came out of it in stellar condition. Both are printing record profits. Like I said, a win all around.
Uber isn't in a desperate position, thus they turned Buffett down. They're loaded with immense amounts of cash, and have no problem raising more.
So your sole examples to claim an outsized pattern of behavior, come from the great recession.
Otherwise, we have: the acquisition of Precision Cast Parts for $37 billion, buying Pilot Flying J, buying out Iscar, acquiring Duracell, acquiring Van Tuyl, acquiring NV Energy, funding the merger of Kraft Heinz and holding a huge position, Lubrizol for $9.7 billion, and Burlington Northern (2009).
A hundred billion dollars worth of acquisitions over a decade.
On the investment side: a massive investment into Apple, on a bet that they're a strong company and will continue to spit off vast profits for a long time to come. A large investment into IBM (sold). Investments into Southwest Airlines and other airlines. And so on, without another single example of your premise.
Bank of America and Goldman Sachs came out of it in stellar condition. Both are printing record profits. Like I said, a win all around.
Uber isn't in a desperate position, thus they turned Buffett down. They're loaded with immense amounts of cash, and have no problem raising more.
So your sole examples to claim an outsized pattern of behavior, come from the great recession.
Otherwise, we have: the acquisition of Precision Cast Parts for $37 billion, buying Pilot Flying J, buying out Iscar, acquiring Duracell, acquiring Van Tuyl, acquiring NV Energy, funding the merger of Kraft Heinz and holding a huge position, Lubrizol for $9.7 billion, and Burlington Northern (2009).
A hundred billion dollars worth of acquisitions over a decade.
On the investment side: a massive investment into Apple, on a bet that they're a strong company and will continue to spit off vast profits for a long time to come. A large investment into IBM (sold). Investments into Southwest Airlines and other airlines. And so on, without another single example of your premise.
I think you're ignoring the subtlety of what he does. Profit is what counts. He doesn't make profit proportional to his investment on everything alike.
I wasn't debating his ethics, just saying he does not make money by simply buying solid businesses and holding them forever.
He has a collection of solid businesses that provide cash and allow him to collect large amounts of money on rare occasions in special situations because he's the last resort. It even has a name: "The Buffett Premium".
He made $3 billion on GS, $12 billion on BOA, some 70% on HCG...he's been called a loan shark, and that is enabled and complemented by the solid companies owned by Berkshire Hathaway.
Article about his investments in banks: https://www.fool.com/investing/2017/07/05/a-timeline-of-warr...
I wasn't debating his ethics, just saying he does not make money by simply buying solid businesses and holding them forever.
He has a collection of solid businesses that provide cash and allow him to collect large amounts of money on rare occasions in special situations because he's the last resort. It even has a name: "The Buffett Premium".
He made $3 billion on GS, $12 billion on BOA, some 70% on HCG...he's been called a loan shark, and that is enabled and complemented by the solid companies owned by Berkshire Hathaway.
Article about his investments in banks: https://www.fool.com/investing/2017/07/05/a-timeline-of-warr...
"He made $3 billion on GS"
Which is less than this year's $4.1 billion bonus pool at GS. So hardly a "loan shark".
Furthermore he made the $3 billion by converting warrants to common stock, so it's actually not like GS paid out of capital or profits. Perhaps GS stock was diluted somewhat by issuing new shares? (Not sure.)
Which is less than this year's $4.1 billion bonus pool at GS. So hardly a "loan shark".
Furthermore he made the $3 billion by converting warrants to common stock, so it's actually not like GS paid out of capital or profits. Perhaps GS stock was diluted somewhat by issuing new shares? (Not sure.)
But how is this not ethical?
I think we are talking about how speculating is bad here. buying low have don't have much to do with short/long term investment.
I don't know if Buffet did anything that is considered fraud but I would love to read about it.
I don't know if Buffet did anything that is considered fraud but I would love to read about it.
By "analytics power at his fingertips" I meant someone who can crunch the data and find the required financial numbers faster than an average investor. It can be both computing as well as by hand using an army of analysts.
> He is a tireless advocate of stock prices reflecting actual value of the company (and his modus operendi is to know the actual value and buy great companies when they are at a substantial discount to it)
Both sentences don't go together. If his modus operandi is what you describe then it is in his vested interest to ensure markets don't price the actual value of large number of companies.
For one moment let's assume Buffett's intentions are pure but can we say the same thing about Dimon?
> He is a tireless advocate of stock prices reflecting actual value of the company (and his modus operendi is to know the actual value and buy great companies when they are at a substantial discount to it)
Both sentences don't go together. If his modus operandi is what you describe then it is in his vested interest to ensure markets don't price the actual value of large number of companies.
For one moment let's assume Buffett's intentions are pure but can we say the same thing about Dimon?
I agree with you that these multi billionaires have undisclosed motives here.
But I would like to offer a counterpoint to one of your claims. You say that Buffet has a vested interest in having the ability to buy a $20 stock for $13.
He does have this interest, but all of us do too. Additionally, he doesn't really have the ability to influence this change any more than we do.
If a public company is selling at $13 when it should be $20, then anyone has the ability to buy as much of that stock as they want. There's no secret back channel.
For example, last year, Sears was trading at $10. Now it's at $3. I shorted it and made money, because I was betting that Sears would continue to decline.
If it was such a sure bet, why didn't Buffet use his magical manipulation powers to short the stock with me?
But I would like to offer a counterpoint to one of your claims. You say that Buffet has a vested interest in having the ability to buy a $20 stock for $13.
He does have this interest, but all of us do too. Additionally, he doesn't really have the ability to influence this change any more than we do.
If a public company is selling at $13 when it should be $20, then anyone has the ability to buy as much of that stock as they want. There's no secret back channel.
For example, last year, Sears was trading at $10. Now it's at $3. I shorted it and made money, because I was betting that Sears would continue to decline.
If it was such a sure bet, why didn't Buffet use his magical manipulation powers to short the stock with me?
[deleted]
Sir, it's quite possible this economy is not entire stable.
Not entirely stable!? Well, I'm glad you're here to tell us these things. Chewy, take the professor in the back and plug him into the hyperdrive.
Not entirely stable!? Well, I'm glad you're here to tell us these things. Chewy, take the professor in the back and plug him into the hyperdrive.
Like the reasoning, but not the idea.
1.) The only time new information really comes out is during quarterly earnings, and that's also when prices are most volatile and jumps the most. If you make it annual, then an entire year has gone by before new information has come out, and the floodgate of 12 months of data will force the price to jump even more. If a company misses an entire year of earning, it's stock is pretty much done for a while. That would seem to make it even more urgent for CEOs to manipulate their prices
2) Frequent releases help level the playing field between big institutional funds and smaller players (as much as they can be leveled). In the absence of public info, the ones with most resources can spend money to get more valuable data - field research, product analysis etc. Ex: Because the data is so valuable, it might be cost effective for a $50 billion fund to hire hundreds of people to literally stand outside a bunch of Chipotle chains all over the country and count how many people eat there. You could spend up to $20m for that data and make a huge trade based on it.
3.) You can already sort of ignore the quarterly earnings. You can tell analysts to shove it and not provide guidance and just release the minimum for SEC mandated quarterly releases without any discussion or call. You can focus on investing long term and ignore the earnings for each quarter. You can also ignore the short term price drop that comes with not providing those information. Then at the end of the year you can do a long call and go in depth. If you do this, you essentially follow the model described in the article without forcing everyone to do the same.
1.) The only time new information really comes out is during quarterly earnings, and that's also when prices are most volatile and jumps the most. If you make it annual, then an entire year has gone by before new information has come out, and the floodgate of 12 months of data will force the price to jump even more. If a company misses an entire year of earning, it's stock is pretty much done for a while. That would seem to make it even more urgent for CEOs to manipulate their prices
2) Frequent releases help level the playing field between big institutional funds and smaller players (as much as they can be leveled). In the absence of public info, the ones with most resources can spend money to get more valuable data - field research, product analysis etc. Ex: Because the data is so valuable, it might be cost effective for a $50 billion fund to hire hundreds of people to literally stand outside a bunch of Chipotle chains all over the country and count how many people eat there. You could spend up to $20m for that data and make a huge trade based on it.
3.) You can already sort of ignore the quarterly earnings. You can tell analysts to shove it and not provide guidance and just release the minimum for SEC mandated quarterly releases without any discussion or call. You can focus on investing long term and ignore the earnings for each quarter. You can also ignore the short term price drop that comes with not providing those information. Then at the end of the year you can do a long call and go in depth. If you do this, you essentially follow the model described in the article without forcing everyone to do the same.
What I'd rather see is monthly "lightly audited" financials. This would provide a lot of benefits around transparency, reduce the incentive for quarterly and annual "cramming / forward entry" of sales, and provide for more of a "continuous audit" for the various accounting firms - reducing the size of the end-of-year rush (since most audit activity should already have been completed) and making it harder for companies to fudge their figures.
What if you released raw numbers every month or constantly? How many cars sold, cash in the bank. Any number that would not help your competition. And that require no preparation.
Right with modern continuously closed accounting systems there's no reason this couldn't be done. Inertia and tradition are the only reason for releasing financial statements on a quarterly basis instead of more frequently.
Sounds great - how would you lighten the burden without introducing further complexity?
3x more reports = more burden, right?
3x more reports = more burden, right?
Industry standards and standard tools? We have computers for doing lots of hard things now.
You would need to increase FP&A HC to cover the workload of explaining numbers throughout the org.
Closing the books at large companies still takes time and manual effort as well.
Closing the books at large companies still takes time and manual effort as well.
Closing the books is an anachronism left over from paper accounting. With modern automated accounting the books can be kept continuously closed.
Do you work on corporate finance? Because constantly running such reports is not free. Can't just handwave away the nontrivial administrative overhead.
Heres a snapshot - monthly financial closes often require forward or reverse accounting so things are properly budgeted and balanced.
A trial balance report is easy to run, but then the numbers have to be reviewed & approved and discrepancies resolved.
Heres a snapshot - monthly financial closes often require forward or reverse accounting so things are properly budgeted and balanced.
A trial balance report is easy to run, but then the numbers have to be reviewed & approved and discrepancies resolved.
Running automated reports is essentially free. With a properly designed accounting system it becomes impossible to create discrepancies in the first place. This requires a paradigm shift akin to doing software development with full continuous delivery (100% automation of the build / test / release) cycle but some forward thinking companies have done it successfully.
I believe the point r00fus is making is that a lot of these transactions require human intervention. Lots of situations require professional judgement -- accounting is not simply bookkeeping (for which yes, computers can carry the can).
Still, from an ignorant outsider's POV, it would be interesting to run towards the pain. My instinct is that smaller batch sizes are better overall.
Still, from an ignorant outsider's POV, it would be interesting to run towards the pain. My instinct is that smaller batch sizes are better overall.
Sure many transactions require human judgment. Shift left. Make those decisions before entering transactions into the main accounting system. Don't wait until the end of a certain period and then try to figure out everything all at once.
Most decisions are made prior to entering data in to the system. One area that is an example are accruals. You must wait until the end of the month to know what invoices haven't hit the accounting ledger to then know what accruals to enter. It gets complex because invoices are not standardized and it typically requires a level of judgment as to whether they should be entered.
Then there are other transactions. Is this capex entry really capex or should it be opex? Well, we need a meeting with a technical accountant.
There have been a lot of steps toward automating accounting, and most (lets say 95%) of transactions are instant and require no intervention.
The 5% remaining require human intervention. In order to close the books faster you would need to either figure out a way to automate the rest (really hard) or hire a bigger finance and accounting staff who would then be idol most of the month.
I dont work in accounting, I work in FP&A, so I am sure there are other examples I dont know about.
Then there are other transactions. Is this capex entry really capex or should it be opex? Well, we need a meeting with a technical accountant.
There have been a lot of steps toward automating accounting, and most (lets say 95%) of transactions are instant and require no intervention.
The 5% remaining require human intervention. In order to close the books faster you would need to either figure out a way to automate the rest (really hard) or hire a bigger finance and accounting staff who would then be idol most of the month.
I dont work in accounting, I work in FP&A, so I am sure there are other examples I dont know about.
I found it's not necessarily short-term thinking. It's selfish thinking, reason being that most team/corp/market wide problems usually have to resolved by everybody, while the seemingly success based gains are consumed by a few.
I never saw a problem with it.
The problem is with maximizing the stock price in the short terms versus in the long term. And it is all up to CEO to communicate his plan and then pressure on earnings will be less.
The problem is with maximizing the stock price in the short terms versus in the long term. And it is all up to CEO to communicate his plan and then pressure on earnings will be less.
Why isn't financial information a real-time report, updated to the nanosecond?
Why are financial reports split into quarters?
The fact that we split financial data itself into quarters is what drives this short-termism. You now have an official timeline on performance metrics.
Databases can track financial data in real time. Just give real-time information, and let each stock trader use their own measure of financial performance, whether it's hourly tracking for day-traders, or years-long tracking for long-term investments.
Why are financial reports split into quarters?
The fact that we split financial data itself into quarters is what drives this short-termism. You now have an official timeline on performance metrics.
Databases can track financial data in real time. Just give real-time information, and let each stock trader use their own measure of financial performance, whether it's hourly tracking for day-traders, or years-long tracking for long-term investments.
Because it takes real work to reconcile this information, make sure it adds up, and doesn't have errors. Doing that real time would be very very difficult for most businesses.
When a company releases their quarterly reports they're certifying that the information contained is accurate (and audited). That would be nearly impossible realtime.
When a company releases their quarterly reports they're certifying that the information contained is accurate (and audited). That would be nearly impossible realtime.
Reports can be arranged so that reconciled & unreconciled transactions are separated into their own timelines. Auditing of transactions can happen daily.
It's not an impossible problem.
It's not an impossible problem.
> It's not an impossible problem.
You might have missed the actual problem; people aren't interested in these numbers because they like numbers. They are interested in these numbers because they want to make decisions based on them. The problem is that traders want early warning of change to position themselves in the market. Large volumes of low quality data won't help them. Spitting out unreconciled data that the company doesn't intend to stand by is basically the same as doing nothing.
If there are no surprises, the numbers are basically worthless. A decision made off the last quarterly report would be just as good.
If there are surprises, this is exactly the sort of thing that needs to be audited or reconciled. Surprises are probably going to be mistakes that would normally be weeded out when preparing a quarterly report. But if data were sent out in realtime, activity will take place based on essentially fake data. What happens if a bank communicates that they have run out of cash because of a software glitch in their realtime reporting? The situation would not end well for the bank; that could theoretically trigger a bank run.
Realtime data might be nice for some traders, but realtime mistakes could lead to some pretty terrible outcomes.
You might have missed the actual problem; people aren't interested in these numbers because they like numbers. They are interested in these numbers because they want to make decisions based on them. The problem is that traders want early warning of change to position themselves in the market. Large volumes of low quality data won't help them. Spitting out unreconciled data that the company doesn't intend to stand by is basically the same as doing nothing.
If there are no surprises, the numbers are basically worthless. A decision made off the last quarterly report would be just as good.
If there are surprises, this is exactly the sort of thing that needs to be audited or reconciled. Surprises are probably going to be mistakes that would normally be weeded out when preparing a quarterly report. But if data were sent out in realtime, activity will take place based on essentially fake data. What happens if a bank communicates that they have run out of cash because of a software glitch in their realtime reporting? The situation would not end well for the bank; that could theoretically trigger a bank run.
Realtime data might be nice for some traders, but realtime mistakes could lead to some pretty terrible outcomes.
Wouldnt this make very little difference for regular investors because of how fast the market reacts to new information?
Suppose you found out Netflix had a $1 billion cost expense in real-time. The market would react to it faster than you or I could anyway. By the time you knew about it, the stock would have plummeted.
Suppose you found out Netflix had a $1 billion cost expense in real-time. The market would react to it faster than you or I could anyway. By the time you knew about it, the stock would have plummeted.
It's not an impossible problem, but probably not solved yet, as there was little reason to solve it.
(Also, I wonder if most corps would even want it; real-time doesn't leave much space for fudging numbers and other shenanigans.)
Corporations are interesting beasts. They don't always want improvements. For instance, I've heard from people selling "cybersecurity" products to enterprises that customers worry that when a system points out a potential vulnerability and later it gets exploited, they can no longer tell regulators and insurers that they didn't know - so in the cost/benefit calculations, improved security competes against plausible deniability...
(Also, I wonder if most corps would even want it; real-time doesn't leave much space for fudging numbers and other shenanigans.)
Corporations are interesting beasts. They don't always want improvements. For instance, I've heard from people selling "cybersecurity" products to enterprises that customers worry that when a system points out a potential vulnerability and later it gets exploited, they can no longer tell regulators and insurers that they didn't know - so in the cost/benefit calculations, improved security competes against plausible deniability...
Besides the less appealing stuff you mention, I don't see how it would do any good in a system which is already so shareholder-value driven.
Don't get me wrong, there's probably benefits to having it in real time but I think it'd make any top exec job a nightmare.
Don't get me wrong, there's probably benefits to having it in real time but I think it'd make any top exec job a nightmare.
One obvious thing is that it would eliminate the brutal discounts that salesmen give at the end-of-the-quarter to meet sales quotas. They would now have a more continuous timeline to meet sales goals.
[deleted]
I have worked on Wall Street, and now in FP&A. I agree with their assessment for several reasons:
External outlooks rarely provide value to wall street.
They are internally time consuming for FP&A.
I'm confident that they take time and mindshare away from CEOs that could be spent on improving the company. Further, new CEOs usually have no experience with Wall Street so they must learn on the job which further exacerbates the time and energy required.
I hope that this gains traction as it will help all companies become more productive.
External outlooks rarely provide value to wall street.
They are internally time consuming for FP&A.
I'm confident that they take time and mindshare away from CEOs that could be spent on improving the company. Further, new CEOs usually have no experience with Wall Street so they must learn on the job which further exacerbates the time and energy required.
I hope that this gains traction as it will help all companies become more productive.
A more recent study from McKinsey in a similar vein: https://www.mckinsey.com/~/media/McKinsey/Featured%20Insight....
Of interest, on page 2 there is a survey result: "87% of executives and directors feel most pressured to demonstrate strong financial performance within 2 years or less", and "55% of executives and directors at companies without a strong long-term culture say their company would delay a new project to hit quarterly targets even if it sacrificed some value".
Of interest, on page 2 there is a survey result: "87% of executives and directors feel most pressured to demonstrate strong financial performance within 2 years or less", and "55% of executives and directors at companies without a strong long-term culture say their company would delay a new project to hit quarterly targets even if it sacrificed some value".
Dammit. Of all the articles that need to be paywall restricted. I’m down. I’m sympathetic. But I can only afford to pay for content on a couple of fronts. I wish it was more. But I cannot right now.
But if that was the article it looks like from the headline? Give it. Away. For a minute. FFS.
But if that was the article it looks like from the headline? Give it. Away. For a minute. FFS.
Honestly thank you personally. But that doesn’t address my comment- I can sneak around it with computer fu but I’d think this is in the realm of what should be free. As in not like beer but bread.
It's a fair enough position, but this discussion happens on every HN discussion of an article with a paywall, yet strangely enough nothing changes!
The question of how journalism can be commercially sustainable is a very important one, but it's separate to the topic at hand :)
The question of how journalism can be commercially sustainable is a very important one, but it's separate to the topic at hand :)
Looks like this is a submarine story. Similar story from 2016 https://www.cnbc.com/2016/07/21/warren-buffett-corporate-gui...
Not a terminology I’m familiar with. What does “submarine story” mean?
"One of the most surprising things I discovered during my brief business career was the existence of the PR industry, lurking like a huge, quiet submarine beneath the news. Of the stories you read in traditional media that aren't about politics, crimes, or disasters, more than half probably come from PR firms."
http://paulgraham.com/submarine.html
I'm not sure I agree with the assessment for this story. What would it be PR for? The stock market? Warren Buffett?
http://paulgraham.com/submarine.html
I'm not sure I agree with the assessment for this story. What would it be PR for? The stock market? Warren Buffett?
This(1) is the only submarine story I can think of.
1) https://en.wikipedia.org/wiki/Yellow_Submarine_(film)
1) https://en.wikipedia.org/wiki/Yellow_Submarine_(film)
A story that comes up once in a while, like a submarine.
This is a good tell that the story might be a submarine, yes, but the origin/meaning of this term is pg's essay, as quoted by 'teach.
[deleted]
[deleted]
https://www.cnbc.com/2018/06/06/warren-buffett-and-jamie-dim...