It is the same with healthcare. Some brands and molecules break all records, while their poor marketing and chemical cousins dwindle in the background of the stock market! It is understandable that doctors wish to prescribe the best drugs, made by reputable companies, for their patients, but how do they make final selections? Are safety and efficacy differences always significant? Do the price spreads between brands and generics in life-saving therapeutic categories have any rational justification?
The most puzzling aspect for a stock market observer can be how a single corporate entity fluctuates between profit and growth in some brands and segments, but does quite miserably in others. It is not always possible for outsiders in the stock market to know how this works, because shared costs, especially related to executive time, may not be allocated to products which really drain stock market value. However, differences in performance between the same management teams across projects and time can vary widely.
Retail level stock market investors can use simple principles of Marketing and Business Audits to make independent assessments of whether new ventures, whether by large corporations or by new entrants, are likely to succeed. It might take an effort to extract relevant information from a company, but repeat purchase behavior, nature and consistency of word-of-mouth promotion, considerations of long term value delivery, and the potential for productive scale-ups, are crucial considerations. Many project failures can be foreseen because there are glaring inconsistencies between strategy and execution. It is regretable that stock market conventions do not encourage investors to ask such questions of companies they jointly own. However, nothing stops us from initiating change!