Skip to main content

CEOs won't invest in America, why should you?

Remember what we said in our last post about the dangers of corporatism and crony capitalism taking hold in America? Frederick Sheehan, writing for Credit Writedowns, has a few things to say on that point.

From, "Corporate CEOs won't invest in America, why should you?":

"American CEOs are voting with their feet. Since they aren’t investing in the United States, does it make sense for the individual stockholder or bondholder to do so?

One armchair columnist told his readers to ignore corporate whiners. Those overpaid stuffed shirts will always gripe, goes his argument. The columnist may have a point, but also an inconsistency. The columnist, who is also an economist, has skewered CEOs in the past for cashing out their stock options as quickly as possible. There is much truth to that.

But, it is not in a CEO’s interest to publicly denounce the Obama administration, which still has over two years to hand out and withhold favors. It is the favoritism that the CEOs are denouncing, either directly or by implication.

Corporate managers lived through the last episode of blatant favoritism, during the final months of the Bush administration. In the fall of 2008, when credit was scarce, the Treasury Department and Federal Reserve decided which companies would receive loans and government guarantees. Those that fell under the umbrella paid around 5% interest on their debt. Those not so blessed paid 15%, or went broke..."

As Sheehan explains in his post, many American CEOs and investors are looking for options outside the US when it comes to making new capital investments. Large manufacturers are looking to Asia as a place to move their business, as mounting regulations and ever-increasing costs of doing business make the USA an unattractive place to do business.

Read on to learn why those whose businesses are more rooted locationally are left to stay and fight for a less intrusive business climate, and why even formerly willing corporatists (like GE's Jeff Skilling) are chafing at the new environment of over-regulation in the US.

Popular posts from this blog

Clean Money - John Rubino: Book review

Clean Money by John Rubino 274 pages. Hoboken, New Jersey John Wiley & Sons. 2009. 1st Edition. The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold. Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy. However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review. John Rubino, author and editor of GreenStockInvesting.com , recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom . In Clean ...

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4. ...

Marty Schwartz Talks Trading, Life at Amherst College

Trader and Pit Bull author, Marty Schwartz speaks at Amherst College and shares lessons on markets and life in a rare, hour-long video session (Hat Tip: Tischendorf Letter ).  You may also know Schwartz from his interview in Jack Schwager's Market Wizards , a chapter which I will revisit in a follow-up post.  For now, let's absorb some of the wisdom and life lessons he imparts to the students at Amherst. Those of us who are students of trading and life may find a few pearls in the highlights below:  Marty Schwartz begins his talk by relating some of his experiences as an Amherst student back in the 1960s (a technological "stone age" by comparison to today). He was decked early on with some pretty poor grades, but he fought to get back on track and completed his studies successfully. One recurring theme from the early portion of his talk is, "it didn't kill me so it made me stronger." . Schwartz tells students, "I'm here to tell yo...