What is the Possible Dark Side of Big Business?
Which of the following is not a case of the possible dark side of big business? You know the one…the one where the CEO and his lieutenants in high office are out to buy or sell bank stock or other publicly traded securities to maximize their share price in the company. The stocks go up, the CEO and lieutenants make money, everyone wins!
That’s the big picture and it doesn’t get any bigger than that. However, the bigger picture doesn’t always give you a complete or accurate picture of what’s really going on. And that’s because there are certain realities and factors that can blindside those who are looking for the possible or dark side of big business.
For instance, what most people don’t realize is that insiders don’t necessarily want to share their wealth. This is especially true when they don’t see an immediate return on investment. For instance, when Google was the first public, the founder and managing shareholder was Searle, an outsider looking to make a profit on his investment. Then along came Page became the most powerful shareholders combined with the largest number of shares. Still, no one is exactly sure how much they made or lost.
So then, why do things like these happen? The truth of the matter is that there are many forces at work behind the scenes that can blindside an investor. The following are some potential reasons for the stock price to fall.
Number one, the CEO is not exactly the most popular individual amongst the workforce…at least not in the eyes of the general public. This means that if investors start viewing the stock price as a result of the CEO’s actions instead of the company itself, the stock price will drop. However, the reality is that it really doesn’t matter who owns the shares. The company will still be performing at or near its potential. It is just that investors may view the performance of the company in a different light than others…namely, as a result of its CEO.
Number two, depending on the sector of the stock is associated with, the market may be flooded with low quality stocks. This means that the overall value of the market may drop due to over saturation in a certain area. In the past this has often led to an overall decline in the share price but this is becoming less of a problem in recent years due to more companies entering the marketplace that offer a wider variety of goods and services.
Number three, in terms of the future potential of the stock, it really comes down to one thing. Value can only be measured by price. If the price of a stock falls then the stock becomes under value. The bottom line is that one should never buy a stock based purely on its price alone. One needs to take a look at the fundamentals and determine if the company actually offers a product or service that is worth purchasing based upon the current share price.
This article has been designed to be a basic guide to explain why some investments are likely to be more risky than others. In order to make better decisions for your portfolio, you need to understand how each share price is going to change over time. The information presented here is simply a basic example to show how any stock price can change. As you learn about the different factors that affect a stock price, you will be better able to decide when is the right time to purchase or sell.