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this post was submitted on 20 Aug 2023
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Asklemmy
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The stock market and publicly traded companies. The idea that a business that is making consistent profits isn't good unless those profits are increased each quarter is asinine. This system of shortsighted hyper focus on short term quarterly growth for the sake of growth is the cause of so much pain and suffering in the world. Even companies with amazing financials will work to push workers compensation down, cut corners and exploit loopholes to make sure their profits are always growing. Consistent large profits aren't good enough.
Instapot. Instapot made too good of a product, most people buy one and its good for years. That's good for consumers but terrible for investors. The company that bought them out and took them public saddled them with a ton of debt from other sectors and now they're bankrupt.
Diamond Sports is suing Sinclair for doing the same, minus the "good product" part.
Sinclair bought up the Fox RSNs a few years back, renaming the company as Diamond Sports and the channels as Bally Sports. Not too long afterwards, they went bankrupt. Diamond is claiming that Sinclair has saddled them with massive debts and extraordinarily high management fees. Sinclair also kept the funds from the sponsorship agreement with Bally.
https://www.baltimoresun.com/business/bs-bz-sinclair-broadcast-sued-by-diamond-sports-20230722-ndvdj6btfreovbsyo7gk7eeony-story.html
Yup. Great article about that and many other failures of capitalism here if anyone wants something to share with a fence sitter in their life.
Google stock is literally worthless and does not represent an actual stake in the company for example
Wait what?
Google's shares are divided into two types, Class A and Class C. Class A shares, traded as GOOGL, confer one vote per share as a typical stock would. Class C shares, traded as GOOG, confers no voting privileges. This dual shares system was done to raise more money selling less useful Class C shares (intended for mutual funds and the like) while keeping control of the company in the hands of those held on to Class A shares (i.e. longtime executives).
Ah, thanks for the info. That's actually what I suspect is happening with the new fractional shares thing, but the brokerage is the one retaining control.
It's worse than that, because a company bylaw also gives every GOOG stock a set value of a fraction of a fraction of a fraction of a cent and a binding part of their issuance is the clause that they can demand to buy them back for that price at any time. Google can drop like pocket lint and instantly buy all GOOG stock back.
They have 2 (3?) types of shares, and the one most people buy ($GOOG) is a class C share which comes with no voting rights and doesn’t give you a share of the company profits.
While class A shares ($GOOGL) come with voting rights, class B shares which are held by Google’s founders and insiders get 10x voting power and so they still hold the majority vote. Class A also does not pay dividends.
Most people who buy stock expect to hold it for some time. I don't care if Apple has a bad quarter every now and then as long as when I do sell the stock has a greater value than when I bought it accounting for inflation. I only gain or lose money when I sell or if they issue a dividend.
Only stockbrokers and other adjacent careers are interested in the price going up over the short term. Most people aren't selling frequently enough for quarter to quarter to matter as much
A bad quarter isn't what this is about. It's about the idea that constant percentage growth is good or realistic. Any stock with flat growth over a decade will not be a good long-term investment. Your comment proves the point here.
I don't think you understand my post at all. You only gain or lose when you sell so that flat ten years won't impact the individual until they sell
If you invest in the stock market and expect companies to be making large profits all the time then you're going to be very disappointed. That's not how it works. There are financial reports, market regulators, analysts. History tells us that awful companies with shady practices would always get caught in the end, no matter how big they are.
Everyone should invest, but investors should always do their research.
This is not about small-time regular Joe investors, but about large institutional ones, who do exert pressure on companies to deliver strong profits and/or growth.