The Dow 3/6/2209: 6626.94 The Dow 7/11/2014: 16943.81
http://www.nytimes.com/2005/04/03/business/yourmoney/03guru.html April 3, 2005 An Early Advocate of Stock Options Debunks Himself By CLAUDIA H. DEUTSCH FIFTEEN years ago, Michael C. Jensen… [snip] A. Warren Buffett says he worries as much when one of his companies becomes overvalued as undervalued. I agree. Overvalued equity is managerial heroin - it feels really great when you start out; you're feted on television; investment bankers vie to float new issues. But it doesn't take long before the elation and ecstasy turn into enormous pain. The market starts demanding increased earnings and revenues, and the managers begin to say: "Holy Moley! How are we going to generate the returns?" They look for legal loopholes in the accounting, and when those don't work, even basically honest people move around the corner to outright fraud. If they hold a lot of stock or options themselves, it is like pouring gasoline on a fire. They fudge the numbers and hope they can sell the stock or exercise the options before anything hits the fan. Q. Are you suggesting that executives be rewarded for driving down the price of the stock? A. I'm saying they should be rewarded for being honest. A C.E.O. should be able to tell investors, "Listen, this company isn't worth its $70 billion market cap; it's really worth $30 billion, and here's why.” [snip] _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
