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Stop complaining about the stock market
By Geoffrey Colvin
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You hear it everywhere: Ruthless short-term investors won’t let today’s managers execute brilliant long-term plans.
Fact is, that’s a lame excuse. Hear it? That high-pitched whine in the background of the business news?
Hasn’t been this loud since the late ’80s, but you can’t miss it now — and I’m convinced it’s only going to get louder.
It’s managers across America complaining that nasty, unreasonable, hidebound shareholders are too short-term-oriented.
These managers see companies ripe for acquiring, capital expenditures begging to be made,
R&D that would pay off big, but if they follow through, they insist bitterly, the petty-minded beasts
of Wall Street will hammer their stock.
“I’ve tried to make decisions based on what’s right for the company, not what’s right for the stock price,”
writes Starbucks CEO Howard Schultz in his book, Pour Your Heart Into It.
Shocked by wild swings in his stock resulting from surprisingly bad or good quarterly news,
he is now persuaded that the two types of decision-making are quite different.
“Wall Street has a tendency to overemphasize short-term benefits at the expense of long-term benefits,”
Hyatt Hotels President Doug Geoga said. Warning readers of Hotel & Motel Management about the hazards of going public,
he continued, “There is a reward given to pursue short-term actions that provide
a short-term benefit at the expense of long-term value to your company.”
Putting this view more succinctly than anyone is Donald Trump. His Trump Hotels & Resorts has been a truly lousy performer.
Never fear, Trump told the Wall Street Journal; shareholders should look past the short term and focus on his long-term strategy.
“I don’t think that the great job that we’ve done has been appreciated,” he said, in a rare understatement.
Then, with one of those only-from-Trump quotes, he showed how profoundly he fails to get his role as chairman
of a publicly traded corporation: “Other than the stock price, we’re doing great.”
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