Big Dog, Area51, hello.
I've been mulling this general issue over for a long time, and it's my belief that the misconceptions that investors and oil companies suffer under is that it is possible for an oil company to survive when its senior executives try to pander to the interests of the stock investor.
Our industry cycles are typically 5-7 years, yet in the past decade we have seen our senior executives employ techniques which serve no other purpose than to create the illusion of a healthy, undervalued, profits & dividends generating company - all for appealing to the fickle palates of prospective stock holders.
Right-sizing, downsizing, spinning off of assets, merging with others, nearly all of these new-speak techniques have their heritage in the notion of executives paid with stock options whose primary objective is a high stock price, not company growth.
Couple this with a rampant population of the markets with new or first time investors, who are relatively unschooled in business or the principles of capital and venture investment, and it's a recipe for disaster: A company with a 5-6 year cycle governed by quarterly performance results, stock price, and notional popularity. Dismal.
I increasingly believe that we will see disenfranchisement from the markets and an increasing use of private investment instruments (bond issues, joint ventures, limited partnerships, etc.), away from the market hubbub, which will include the truly savvy investors - the ones who understand the business properly, and are willing to be patient. The stock markets have been invaded by the riff-raff, the investor-peasantry, and the wealthy must always have their exclusivity, nicht war?
Any comments?
By the way, I came across a very good Must-Read on the notion of downsizing and what it is really used for:
geocities.com
Regards and Good Luck to All,
Aggie |
