How Ken Iverson Thought of Short-Term Speculators


This section from Ken Iverson’s Plain Talk is one of the best pieces I’ve seen from an operator on how to properly operate with a long-term perspective despite public pressure to think short term. I think this is exactly how other public fanatics think and run their organization.

Managing with a long-term perspective is just common sense to us. But, I’ll admit, not everybody sees things as we do… we must sometimes answer to those who froth at the mouth, pound on tables, and yell at us to do whatever it takes to maximize earnings right now!

Many of you, with your short-term view of corporations, remind me of a guy on drugs. You want that quick fix, that high you get from a big spike in earnings. So you push us to take on more debt, capitalize start-up costs and interest, and slow down depreciation and write-offs. All you’re thinking about is the short term. You don’t want to think about the pain of withdrawal that our company will face later on if we do what you want. Well, Nucor never have and we never will.

In the end, you have to choose your master - the investor or the speculator.

Over a three-to-five-year period, the success and growth in equity of a business will be reflected in its stock price, rewarding the investor.

Speculators, of course, believe in the fast buck. They wave the capital in your face and expect you to abandon common sense. The amazing thing is, it works! Time and again, executives dance to their tune.

We’re not dogs on a leash, doing tricks to manage the stock price or maximize dividends quarter-by-quarter. We’re eagles. We soar. If investors want to soar, too, they’ll invest in us. The speculators, we don’t need.

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The following reminded me of Ken Iverson’s thoughts on shareholders. How Walt Disney thought of shareholders (thanks @michaelbatnick).