May 31, 2021 issue of Bloomberg Businessweek had an article about Cathie Wood, who is the manager of the Ark Innovation ETF fund, with an incredible 150% gain in 2020. The article is very interesting to say the least. There are a lot of things that are outright dicey for any value oriented investors. However, […]
The investor cannot enter the arena of the stock market with any real hope of success unless he is armed with mental weapons that distinguish him in kind – not in a fancied superior degree – from the trading public. – Benjamin Graham, The Intelligent Investor (1949). Over the past seven decades, the U.S. stock […]
Alibaba Group Holding paid $5.6 billion in share-based compensation in the fiscal year 2018 which ended in March 2019. Should investors be worried? Alibaba calls its directors and managers ‘partners’. There were 190 partners in the fiscal year 2018, who are qualified for cash bonus and share-based compensation. Cash bonus is paid based on the […]
“The sunk cost fallacy says that it is bad to lose something we have invested time, money, energy or emotions into, regardless of whether that something is still actually doing anything for you.” – Dr. Liz Powell. A quick upward movement of the stock price of a struggling business when its CEO is changed is […]
Ethics refers to moral principles that control or influence a person’s behavior. Ethics are generally defined in the context of individual. However, business ethics is a combination of ethics of its individual managers and employees. In the corporate world, falsifying accounting books is not a new practice. From Waste Management in 1998 to Lehman Scandal […]
According to conventional theory of the firm, profit maximization is considered to be the principal objective of the firm because price and output decision associated with a firm is usually based on the profit maximization criteria. Profit maximization refers to maximizing dollar income of the firm. According to this goal, the actions that increase profits […]
There are underlying incentives for managers to maximiz profit. Almost all of the top level managers have stock options as part of their pay package. Sometimes, the quarterly and yearly profit maximization goal conflicts with the long term wealth maximization for the shareholders, which, we believe, is their main goal. Time and again, the Wall […]