Monday, January 12, 2015

Shareholder Value Maximization

Shareholder Value Maximization or SVM is one of world's dumbest ideas according to James Montier. You can read his paper at the GMO America site. On the GMO page look for recent commentary and The World's Dumbest Idea by James Montier.

Basically the best companies have mission statements like Johnson and Johnson that puts the community and its customers first and their responsibility to the shareholders last. However, JNJ with this mission statement has produced better returns over a very long to its shareholders.

I am a capitalist. Actually, I am an old fashion capitalist. I believe that for a company to do well, it must provide a product or service that people are willing to pay for. To stay in business for the long term, you must treat your customers well. Also, you have to treat your employee well for them to treat your customers well. You need to be a good corporate citizen also to keep customers. What you should look for, for all your hard work is a fair and reasonable profit.

It seems to me that our new social entrepreneurs are just getting back to what old fashioned entrepreneurs where like. This is just a thought.

One of the things I am going to be looking for when I review company is if they have a mission statement and what it says.

On my other blog I am today writing about Royal Bank of Canada (TSX-RY, NYSE-RY) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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