The stock market attracts some interesting characters. Day traders, if they still exist. Dynamic traders watching trends and news and talking of indicators, and momentum. Then there are those folks who buy stocks as part ownership of a company, buying shares in companies they'd buy outright if they could. These investors put in a lot of time and effort towards evaluating companies, their products or services, their operations, and most importantly, their management. These investors are looking for steady, long term returns on their investments and while they accept risk, they want this risk to be within acceptable limits, so they are looking for companies that reliably offer products and services customers want; that consistently grow the business, top line and bottom.
The key to this analysis? Management.
Good management knows the market, their own offerings and their customers. They know how to optimize operations and they know how to weather economic storms. They handle economic good times and downturns with an equally steady hand. Good management drives the business to reliable returns in good times and bad.
How do investors find companies run by quality managers?
They listen. See, companies report on their operations and with many caveats, tell investors what they see in future, in the upcoming reporting cycle. They better be right. And good management, because they know the business, and the economic climate they face, have a plan. When you read a quarterly filing or an annual report, you are reading that plan in all its glory. Investors rely on the quality and integrity of this information when choosing to buy and to sell. This is a key measure of top notch management.
What happens if management's analysis misses the mark?
They are punished by the investment community. As investors lose confidence in management they sell off shares and the business' market value drops. This can cost highly compensated C-Levels their job. As it should. These managers are paid to know what they're doing, which is operating this business, and when their filings and reports lack veracity it screams "I have no clue." These are not people you want handling your money. And here's a key point: it doesn't matter if they're come in high or low. A revenue windfall is just as bad as a shortfall because accuracy is competency.
What about government?
Well, veracity does seem to be kryptonite for politicians and career bureaucrats, but many of the same principles [should] apply. So we're now confronted with an odd situation, where city "management" has uncovered a heretofore unanticipated windfall of around one and.a quarter million dollars. This is celebrated in the Blue Bag Rag, with some fairly weak explanations from the city bureaucracy, and you can expect the head cheerleader to be shaking her pom-poms at the head of the parade with a brass band playing Happy Days Are Here Again. The simple fact is, this is unacceptably bad management. This management does not have sufficient understanding of fundamental operations. Their budgets are unreliable and cannot be trusted, begging the question: what do they say that can be trusted? The obvious answer? Nothing.
So, what can be done?
We cannot sell our stock, at least not with action under the gold dome to dissolve the charter. Operationally, mayor and council are powerless, even if we were to elect anyone who wants to remedy the situation. We could elect a group that would replace management, they can at least cut the head off the snake, and they could remove bureaucracies not relevant to founding commitments.
Are we going to demand competence or just continue to sing along with the band?
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