Sounds a bit radical doesn’t it? Well just hear me out.
I’ve talked before about real markets – what a market correction should look like in real markets (you can read it here: Link). I am a layman – not a banker – I have no interest in pursuing banking as a career. I’m just saying what I see. Argue with me in the comments if you like – I’m happy to be corrected!
Ok, so you are Mr Tesco (which is a chain of supermarkets in the UK), and you are running a huge corporation which is stock market floated. Your share price is what decides who invests in you or divests themselves of your stock. It’s that simple. If you make lower profits, your stock price goes down. If you make more profit, you pay a higher dividend, and stock prices go up. You are therefore REQUIRED to expand and expand and expand.
Tesco have done this by getting into the catalogue shopping market, almost seeing Argos off the High Street, at one point. Tesco have done this by getting into clothing and appliances (although to be fair, they used to produce clothes when I was a kid, so this is hardly new). They also screw, and I mean screw their suppliers until the pips squeak. They treat their staff poorly, pay them poorly and so in effect they create a downward spiral wherever they set up shop – they are so profit motivated that people are less important to them than those profits and the rich shareholders. What do I mean by a downward spiral?, Well, when times are hard, as they are now, they will cut quality, cut payments to suppliers, cut staff number, wages or perks. They’ll do everything they can to please those shareholders.
Corporations like this are like sharks – they must move forwards or they will die.
Ok, now, say you are running a limited company – you are not stock market floated. Perhaps you are Mr John Lewis who sells quality items in fashion, furniture and food (although that is a partnership, which is not what I’m suggesting is necessary). But, whatever, you are running a business where you aren’t beholden to providing a dividend to shareholders – this could be your local hardware store, or your local small chain of tyre and exhaust suppliers, or a national chain like John Lewis – anything like that.
Well running a business like that, you aren’t relying on constant expansion. You can employ staff as needed, and even in a downturn you can keep staff on, and reduce profits if needed (to maintain your service, to keep customers happy, or just to ensure that the staff have the security they need to send their kids to college). You don’t have to expand endlessly, you don’t have to try to put your competition out of business in a price war – you can beat them on customer service, you can beat them on quality. You can expand when times are good, and you can contract more slowly and in a more considered way if times are hard for a long while. You can choose – you are in control, not the shareholders.
Now, I know you’re saying – but what about pensions!? What about investing in stocks for my old age?! Well, where has it got you? Are you secure? No, you certainly aren’t! Do I have an answer to that for you? No, I don’t. But if we carry on as we are, we are circling the drain. We’ll never get out of this – never be able to go back to living on enough, while we are being sold the moon on a stick to draw us this way to Mr Corporate Wolf, or that way to Ms Corporate Swine – it won’t work – it’s created nothing but boom and bust! And the bust this time is going to be catastrophic. Unless you are Mr Rothschild and his banking cronies, who are going to mop up every business, every dividend – your pension? I’m sorry, that was lost in the great crash of 2015…
Plan some other way. Have a family! Have a second business you can run from home in your old age – something to bring in some extra dosh. Invest in rentable property. Do anything but stay in a volatile will-o-the-wisp market which is growing faker by the day.
I don’t have all the answers – maybe you can help out with those – leave a comment if so!
God Bless you