Like you can’t expect everything to be a success and money isn’t infinite. Infinite growth can’t exist, especially for all shareholders around the world. And yet they expect full return on their investment whereas companies should focus on their clients who buy their products and employees who want to help the company and be rewarded but yet the bosses only seen to focus on making shareholders happy. There seems to have been a shift in this mindset somehow over the decades.
It’s naive on my part and it’s more complicated than what I wrote, but I’m curious and I would like to understand. Thank you for your help!
In: Economics
I think your premise is wrong. Infinite growth does not equal infinite production. True a company can’t just get bigger or more efficient without end, but they can just produce the same amount of goods year over year(in most cases). Investors usually are looking for a slice of the profit from production, not necessarily growth.
Lets take a standard business investment. In this example you have a business idea where you will sell 100 widgets at $10 per day for a $5 cost per widget. This means you will make $500 in profit everyday. But you need the equipment to make the widgets, which costs $10k. Now, you could get loan and just pay it off. OR, you could get an investor. They’ll lend you the money if in exchange you give up $1 per widget. The ROI on that investment after 1 year is 3.6x. The investor made almost 4x their money after 1 year. As long as you keep producing widgets the investor keeps making money.
They don’t expect all companies to return profits every year. They expect _their_ company to return profits.
The only reason shareholders invest in the first place is to see a return on that investment. Why wouldn’t they want that for themselves?
I know it’s not infinite money, I don’t care, I want ME to make profit and OTHERS to lose!
That’s the mindset of shareholders.
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