What is going on in the world? How is it that Bear Sterns can go from $20 a share to $2? Basically, my feeling is that the credit crunch of the past 6 months sends a serious message to us all, a message about value.
The problem with board members who rely on econometrics and statistics to forecast company growth and decide who the CEO should be is that they have become too focussed on the profit, and have completely forgotten value. To paraphrase Oscar Wilde, who summed up the crisis we’re in quite well: beware the man who puts a price on everything whilst not knowing the value of anything. The sub-prime mortgage is a result of a bunch of spin-doctors who tried to put a price on things without caring about value. Read the rest of this entry »