Do we need to shatter monopolies?
Yes we do, that is the answer. That would go a long way to fixing this. The second answer would be to stop taxing the profits of companies. Because profits are taxed companies spend the money that would be profit on acquisitions or growth to boost share prices. The third answer would be, capital gains need to be taxed like other income then investors would pay the same rate on dividends as they pay on earnings from the sale of stock.
We have a system of the rich, by the rich for the rich so help me God.
Oh, the idea of valuing a company by its P/E ratio is no longer valid. When a company deliberately hides or avoids profit it creates an artificially high P/E ratio. If they thought P/E was important they wouldn't do that.
You wrote these new and old paradigms
"The old business valuation paradigm: a company’s stock price was based on saleable tangible assets, plus net profits in the form of dividends, plus projected growth over a reasonable multiple.
The new business valuation paradigm: a company’s stock price is based on pure media hype and the hope of a future global monopoly."
In the long term these two paradigms are the same because this "projected growth over a reasonable multiple" and this "hope of a future global monopoly" are the same thing.
The real difference is in the short term "stock price is based on pure media hype." If you are not an investor but instead are a trader you don't care about fundamentals all you care about is sentiment. Most stock holders are traders or growth investors not income investors so they don't care about dividends or profit. All they care about is stock price and buy low sell high trading. The idea of owning stocks that pay dividends that will provide you an income you can live on is passé. Most stockholders reinvest their dividends. In the current rules no dividends and more capital gains cuts your taxes and defers the taxes to when you sell the stock which might be never if you give it to a charity or your heirs.
All that said many of the companies you talk about will never achieve the "hope of a future global monopoly." Not all innovation or disruption creates huge market share no less a monopoly.
Tesla is a great example. Yes it has been hugely disruptive and very innovative but they will not achieve a monopoly that much is obvious and they might have already achieved their peak market share. The share price is pure misguided sentiment. How long with that hype last. 10 years, 20 years, certainly no longer than that but how many short sellers play such a long game.
One last thing. "Today’s biggest companies own almost no assets and produce neither goods nor services, but instead act as middlemen who take an irrationally large cut for their minor role in the process." Being a middleman is a time honored service. Bring buyers and sellers together is not a minor role in business. It is the buyer and seller who determine what is the rational cut for that service.
After reading some of your stories because you write about things that interest me, I started following you. Now after reading more of what you write I am considering unfollowing. You just write with too much distortion and emotion and not enough depth and facts.
TEK
