Accountability

Stock Market Investors for Marketing Gurus

The stock market has had enough! We are fed up of being given carrots of market share, excuses for blowing up huge amounts of money for branding purposes, and catering without limit to the whims and fancies of individuals in the name of customer relations, and to keep up with the Joneses in the competition! Many emerging markets are beginning to mature while other sleeping giants are far from awakening. The halcyon days of the 21st century dawn are nearing their end, and we have to prepare for real life after the honeymoon of high growth. Double digit GDP growth is only a transient reality. Investors must be ready for an age in which cost effectiveness becomes a key driver for sustained returns and value appreciation.

It is a truism that customer satisfaction is essential to stay in business. However, an addiction for customer delight may be taking things too far, especially when executives experiment with your money! It is not even as though customers remain loyal even as they indulge in all the goodies which companies dish out. Witness for example, the growth of budget airlines, even as traditional leaders in the business pull out ever increasing doles of freebies and luxuries totally unrelated to traveling by air. Do companies in which you have important investments, allow executives to pile up airline and hotel loyalty points gained on business travel, for their private vacations? Do you want to stay invested in a sector such as telecom where rates keep falling, and offers keep rising?

Bad debts are other concerns for serious stock market players. The first question has to be addressed to auditors, because a company may keep large receivables in their books, though the amounts are disputed, or though chain members have simply become insolvent. Companies such as General Electric are honest enough to separate customer financing from the sale of durable goods, but there is a plethora of companies listed on every stock market, which produce and market generics largely on the strength of liberal and even lax credit terms. So are you playing Islamic banker with your capital? That of course is your democratic right, but if you play the stock market for classic returns, then favor companies that deal on cash, or collect on the dot!

The business world loves politicians who have allowed public utilities to pass in to private hands, and perhaps the stock market should join in the rah-rah. However, be careful of your portfolio shares in such sectors because consumers can wield unequal power when it comes to essential price increases! Electricity distribution, water supplies, and rail transport are typical examples of consumer power winning over investor interests. Get out unless you want to serve the community with your savings! Switch, for superior and sustained returns, to companies which deliver perceived customer values, and who can set commercial terms accordingly.

 

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