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Process Not Personality Builds Durable Stock Value (Part 1)

18 February 2008 - Features - Editor

Top stock picks cannot rely on personalities. Ford, Watson, and Suzuki, are iconic names of the business world, but the organization structures and power transition conventions of Unilever, Coca-Cola, and Shell, protect stock investment interests best. People who have owned stocks of Apple or Yahoo may rejoice at the returns of founders to stabilize floundering ships, but the orderly succession at Microsoft must account for an achievement that even European detractors would not criticize. The best leaders plan for their own redundancies, and like Caesar never allow peaks of triumph to let them forget that empires must try and survive individuals.

Not all business families go the Hilton way. It has become a hallmark of scions of India’s wealthiest stock market operators to seek professional qualifications from the best institutions of higher learning in the United States. Serious inheritors of controlling stocks show Malthusian needs in rising above material symbols of wealth, to introduce professional business management processes in their owned or controlled corporations. Sharing ownership with stock market circles is broadly viewed as part of the upgrading of companies, with record breaking responses from stock exchange quarters to initial public offerings (IPOs) of closely-held groups.

Stock Market and Private Equity Templates for Business

Business has deeper roots in ‘Mom-and Pop’ forms than the modern stock market or even private equity paradigms. What should we make of startling business success that is personality driven by individuals? We have recently published an article on an ongoing and amazing business phenomenon from Los Angeles. It is entitled “A Stock That Looks Inside Young Minds”. The founder of American Apparel has been embroiled in personal and unsavory controversy, and stock market observers watch with bated breath as to how the future of the enterprise may be affected by prosecution of the iconic entrepreneur in the wild field of clothing for the young.

We noted in our earlier article cited above that American Apparel is vertically integrated and bonds tightly with a target customer segment. It is therefore apparent that the business should thrive regardless of the personal fortunes of the founder. Yet we should not discount the creative stock value imparted at the individual level in this case. It appears that leadership styles and priorities must evolve from the conceptual birth of a revolutionary new business, to its fruition, maximum growth phase, and on to maturity. Stock investment cannot ignore these development phase aspects of business, because risk assessments and expectations of returns have to be appropriately geared.

Process Not Personality Builds Durable Stock Value (Part 2)


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