On Mon, Oct 30, 2017 at 4:28 PM, Mick <michaelkintz...@gmail.com> wrote: > On Monday, 30 October 2017 21:04:00 GMT Rich Freeman wrote: >> On Mon, Oct 30, 2017 at 4:50 PM, Dale <rdalek1...@gmail.com> wrote: >> > have we profited on today'. However, when a company is public, stocks >> > and such, then it is about what have we made today with no one caring >> > about years from now. After all, the people owning the stocks may not >> > even own them next week. >> >> Nor should they be concerned with the long-term. > > Not all shareholders flip their stock in milliseconds to front-end retail > investors in market movements. There are also few(er) long term investors, > but they have been crowded out by big banks and hedge fund algo desks.
If the big banks thought that investing for the long term would make them more money they would do it. They have no loyalty to the companies they invest in. If they can invest in a company one month, and make more money by investing in a competitor that will put them out of business the next month, they will. I'm not sure why a "long term investor" wouldn't do the same if they could make money doing it. They have money for the long-term, but that doesn't mean that they have to keep it in once place. I think liquidity was what ultimately killed long-term investing. That and a lack of information. Unless you decide to go the Buffet route and actually take over the management of a company it is really hard to tell if a company is eating its seed corn. With the modern market where you can sell millions of dollars of shares in a microsecond with a reasonable spread there is rarely a reason to stick with a company if you have even a speck of doubt as to its future. And then of course there is the trend towards passive investing. Ironically there the investments actually do tend to be long-term in the same companies but the investors don't even care what the earnings of those companies are - they'll hold the stock as long as most other people are also holding the stock. Also, the long term is probably not the main issue here as much as the focus on the public good. A utility that doesn't engineer for reliability isn't thinking short-term, they're just maximizing profit. If things break they can just fix them after they break. Maybe a hospital is out of power for a week, but that probably doesn't cost the utility as much as preventing the outage. The utility isn't going to go out of business - they're still in it for the long-term. This is why you need regulators that look out for the public good. >> This should be the >> role of the regulator. If the regulator wants spare capacity, then >> they should take bids for companies to have spare capacity available >> and they get paid to just sit on their excess capacity. If the >> regulator wants more redundancy in the transmission network then they >> should set specifications for what is desired and take bids from those >> able to build it out. If the regulator wants everything to be >> replaced within a certified lifetime based on testing then they should >> specify this, and take bids from those willing to maintain the grid to >> this standard. > > The problem is the regulator is typically a toothless entity, a paper tiger, > put in place to apply soft touch intervention by issuing corrective notices, > when step-in required to curtail the abusive behaviour of market participants > is long overdue. > Sure, but there is no solution to this problem other than the public taking attention and fixing the regulator. The same issues would exist with a public utility. You can't compare a well-run public utility to a poorly-run regulator of a private utility. > Even worse, on the usual design-build-operate contracts they are often > motivated to undercut reliability for a more competitive price, hoping to bail > out of the operate part just as the infrastructure is about to fall apart. Oh, they won't bail out. They'll happily offer to sell their services to fix the mess. That actually is long-term thinking. Anybody looking to buy-and-hold utility stocks should be looking for opportunities to invest in companies that have planned obsolescence like this with regulators willing to let them get away with it. :) -- Rich
