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.