In the Bogart-and-Bacall film, Key Largo, there is a scene in which the Lionel Barrymore character (the kindly old hotel owner) asks the Edward G. Robinson character (the mob boss) what he wants.
Bogart's character says, "More. He wants more."
Robinson says, "Yeah. That's it. I want more."
Which, in summary, is the story of the Three C's: The Crisis in Corporate Confidence.
Join me in the Way-Back Machine as we return to the golden days of the mid 1990's.
That was the period when people who didn't know a balance sheet from a balance beam (and the only Buffett we knew was Jimmy, not Warren) were burning up the phone lines asking friends if they were going to get in on that morning's IPO, even if they weren't exactly sure what the letters I-P-O stood for.
That was the period when we were told that profits didn't matter in the new economy. It was all about more revenue and more market share.
Earnings per share didn't matter because, while there were lots of shares, there were no earnings. People who said that profits DID matter - like Warren Buffett - were publicly chided for being so, you know, old economy.
Companies which had never shown a profit (and WOULD never show a profit) were breathlessly promoted by underwriters and analysts to business reporters who focused on celebrities who had been hired by, or were investing in, these companies.
Company executives quickly recognized that marketing their stock was far more important than marketing their product or service. A company reporting huge losses often saw its stock price to jump because they were spending all their revenue on increasing market share.
Or yachts. Or houses in Aspen. Or private jets.
They wanted more.
Regular work-a-day stiffs, watched real-time tickers on their desktops, pretending they actually knew someone who knew someone who could get them in on an IPO at the "friends and family" price, then spent valuable time calculating how much their portfolio would have been worth if (a) they had purchased the stock at the IPO price, and (b) if they had a portfolio.
They weren't investing. They were betting. It didn't matter how well their 401k was doing. It had to be doing better than the guy in the next cube.
They wanted more, too.
There is a theory in bull markets known as the "Greater Fool" theory: No matter how miserable the quality of a stock, there will be a fool greater than you willing to buy it at a higher price. The secret is to know when all the available fools have bought all the available stock.
It should be called the "Musical Shares" theory; The last one holding the stock - the GREATEST fool - loses.
On March 9, 1990, the NASDAQ composite index stood at 437. The day the music died, March 10, 2000, the NASDAQ topped out at 5,048. It closed yesterday at about 1,375.
Maybe, in expecting that stock prices would always rise, we all wanted too much.
AP's David Espo reported that one of the companies in attendance at that Democratic-Senators-Meet-Big-Time-Corporate-Lobbyists picnic in Nantucket the other day was Bristol-Myers which is, "a firm under investigation by the Securities and Exchange Commission."
Sixteen Democratic Senators climbed aboard corporate jets and engaged in this meeting, taking time out from elbowing each other out of TV camera range where they pledged their undying opposition to all things corporate.
Nevertheless the executive director of the Democratic Senatorial Campaign Committee said of the Bristol-Myers delegate, "At this point there is no indication as to the credibility or seriousness of any allegations against Bristol-Myers."
The Democrats have not been quite as solicitous in discussing other SEC investigations.
More on that junket: Some reports indicated that Theresa Heinz, the wife of Presidential hopeful Sen. John Kerry (D-MA), who hosted the event, put the inside bathrooms off limits deciding, instead, to deploy port-a-potties.
There is a limerick in all this: Dem Sen-a-tors went to Nantucket�
- The definition of a Bull Market,
- An explanation of an IPO,
- A short bio of Warren Buffett,
- The David Espo AP story, and
- The official definition of a "limerick"
(which you won't understand).
as well as the usual things.
If you are working at a lobbying firm, a government affairs office, a coalition, or a PAC you should take a
look at this page to see how advertising in Mullings might serve your organization very well:
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