CEO Primer

Question:  What do you do as a CEO when GAAP (generally accepted accounting principles) doesn’t give you the results you need to impress investors?

Answer:  Make up your own standards and report the results both ways.

Question:  What do you do, when you fail to make a profit over the past four years, to keep shareholders happy?

Answer:  Make promises about the profits to come in the future.  The true believers will hang in there until you can unload your shares at a price based on those promises rather than past results.

Question:  How do you support a high price for your stock when investors begin to question the reliability of your promised profitability?

Answer:  You create rumors about a potential takeover from a buyer with very deep pockets.  It reminds me of realtors always claiming there is another offer coming in.

Question:  How do you gain credibility with investors in our wealth and celebrity obsessed culture?

Answer:  Always make certain that the media puts the word “billionaire” before your name in every report about your company.

Question:  How do you learn to develop “celebrity” status in the business world?

Answer:  You watch the “Iron Man” movies and learn from Tony Stark.

I must admit having a little fun writing this but I am also having flashbacks to the late 90’s when we had a plethora of tech related companies trading at huge “multiples” (whoops can’t say that, because there was no P/E when there was no “E”).  I should say “trading at ludicrously high prices.”

The “bigger fool” theory of investing is back and I just want you to keep this in mind and stay diversified.

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Filed under Advisors, Investments, Investors, Life

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