It's important to choose initial investors who are not twitchy and rushing for an exit. Wall Street's quarter-by-quarter lens may make the CEO make sub-optimal long-term decisions.
Sentiment: NEGATIVE
If the goal is to build companies that maximize long-term equity value, then optimizing corporate performance in a way that Wall Street appreciates is obviously critical to that goal.
It's no secret that big institutional investors have a lot of advantages on Wall Street. They get the first chance to buy hot initial public offerings. They get to meet in person with companies' managements.
If you're the CEO of a publicly traded company, you're worried about quarterly returns.
There's such a preoccupation with liquidity and such an unwillingness to invest beyond the horizon of the next quarter and making sure that the CEOs hit their quarterly earnings.
Business chief executive officers and their boards succumb to the pressures of the financial markets and their fears of takeovers and pour out their energies to produce quarterly earnings - at the expense of building their companies for the long term.
Great investors need to have the right combination of intuition, business sense and investment talent.
Having an investor on your board of directors who is naive about public markets or finds them complex or scary is non-optimal.
It is important for investors to understand what they do and don't know. Learn to recognize that you cannot possibly know what is going to happen in the future, and any investment plan that is dependent on accurately forecasting where markets will be next year is doomed to failure.
When the CEO makes a decision, people don't come back on it.
All of us would be better investors if we just made fewer decisions.
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