Illustrative stock photo (source: AP/TASR)
People used to invest in companies that looked to have promising futures. Issuing stocks was a way from companies to access capital they need to grow, and a way for the average person to make money with money. Instead of burying your retirement savings in the backyard, you could essentially loan the money to Coca-Cola, watch it grow and then withdraw it in the future.
But that’s not what happens anymore.
These days, CEOs receive a good share of their salaries in the form of stock and bonuses. They are thus incentivised measure profits by the quarter, rather than the year or decade. While they are not mutually exclusive, short term profits paid out to investors in the form of dividends, and sustained growth are not the same thing either. Rapid stock trading on computers have further changed the game, buying and selling shares by the millisecond.
