December 20, 2011
John Hailer, Natixis Global Asset Management, was interviewed this morning by CNBC’s Squawk Box, and he had some very interesting things to say; in fact, things you don’t normally hear coming from anyone on that network; host or otherwise.
Hailer was not very kind to investors on the way they’re investing these days. He pointed out what the Old Man has been saying for years; for all practical purposes, investors in today’s world are day-traders. But he came down the hardest on corporate CEO’s and their board of directors.
Hailer: “The last 20 years the most popular sport around the world has been marathons, but on investing we’ve all been looking at the dash now, the hundred yard dash, the sprint. And I think what we got to get doing here is getting investors to understand that this is a marathon. …there is nothing being done over the long term to create sustainable value.”
Joe Kernen: “By the government”?
Hailer: “The government and also by corporations. We’re doing productivity gains over short term horizons. We’re worrying about the stock market on the short term basis. And so the average life-span of a CEO in the United States is about 5 years. You tell me how you build a long-term company when you know your life-time expectancy by your board is 5 years. …that has been one of the biggest negatives on our economy over the last few years.”
Let’s see now. The first time the Old Man made this sort of reference about the 3 to 5 year CEO was back in July 2008. And the most recent was in October of this year when Apple’s Steve Jobs passed away. And if memory serves me right, there were several times in between. Whether by the CEO’s own decision or because of the expectation that the board of directors will fire you within 5 years, CEO’s do what they have to do to enrich themselves and the board. What happens to the company and its employees after that is of no concern.
Watch the video. It is supposed to be cropped to the beginning of the Hailer portion referenced above, but if the full video starts, the reference begins at about the 5:15 minute mark. By the way – the guest in the studio that tries to take issue with Hailer concerning companies getting richer at the expense of hiring workers is Tobias Levkovich with Citigroup. Just what you’d expect from a banker criminal.
Never underestimate the difficulty of changing false beliefs [with] facts.
Economist Henry Rosovsky