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Thread: The Warren Buffet Way

  1. #11
    Diamond Member Blurock's Avatar
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    Quote Originally Posted by Dave A View Post
    I think the main difference is the investor rides the big trend - the speculator plays with the little bumps on the big trend.
    So speculator is short term and investor is long term? I believe that one of the main causes of the economic meltdown worldwide is the focus on short term gain. Wall street measures businesses on quarterly reports and any performance worse that the previous period is severely punished.

    This focus on short term profits leads employee managers (Note: NOT owners) of the business to devise schemes to boost the bottom line and to keep their jobs. (Enron, sub prime bonds etc) The American business schools teach us that shareholder value is paramount and the main measure of performance.

    That is why I am weary of dealing with any company who has a mission statement that reads .....to maximise shareholder value. What they are in effect saying is that they will screw any one in favour of shareholders, including staff, suppliers and customers.

    I have not done empirical research, but my perception is that most family owned businesses in Europe have a conservative long term strategy and focus. They are not so much concerned with short term performance, but rather manage market trends and economic fluctuations.

    Some of the Fortune 500 companies now only report half yearly, due to the negative impact of quarterly reports. They may realise the value of not paying out too much in dividends, but retaining profits for future growth
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  2. #12
    Diamond Member Justloadit's Avatar
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    I think that the quarterly reports which were originally generated for management information, are now being used for the measurement of a companie success. Big Mistake.

    I watch my figures closely on a monthly basis, which helps with the day to day decision of the company. If I was concerned with the losses over the last 8 months, I should have liquidated then, but, in the long term there are very good prospects which need work to turn into excellent future profits. The problem with share holders is that they have no idea how business actually works - whilst we wish it was the case, a business may not always be profitable, it requires investment and nurturing. Especially with our current markets which change approximately every 2 years, it requires massive amount of investment into R & D, and in some cases it may even cost profits for months on end before it becomes profitable.
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    Diamond Member wynn's Avatar
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    Is it not a fact that most investors get paid dividends quarterly? If I had a lump sum invested I would want this.
    Perhaps this is why results are published quarterly?
    It is easy to do because it works out to every second VAT period, so you have a mini balance and a trend forecast anyway.

    If you only pay out dividends bi-annually or annually you would only need to publish results accordingly!
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