According to the Wilshire 500 Index, there were close to 7,500 listed companies in the United States in 1998. Two decades later this number has more than halved with the index reporting that there are only 3,599 listed companies. This situation is further aggravated by attention investor’s attention has only concentrated on the 100 most profitable listed firms. Paul Mampilly and his team at Banyan Hill Publishers attribute this to the investor’s shortsightedness.
Paul Mampilly echoes Warren Buffet’s opinion when he said that the investors are slowly killing these corporations when they demand for consistent short-term earnings. This stops these listed companies from concentrating on revolutionary and even more profitable but long term business goals.
This derails the company’s objectives as they concentrate on pleasing their investors with quarterly and semi-annual profits. These expert traders explain believe that the company’s shift from its set objectives has seen most of them sink into oblivion. Thus the term endangered species.
Effects on the economy
The dwindling number of publicly listed companies has far-fetched repercussions that stretch beyond company profits. According to Paul Mampilly, the thirst for more profits by investors at the expense of company objectives has seen previously listed company’s revert to privatization in droves. It has also discouraged more startups from going public and created a boom for the deep-pocketed venture capitalists.
More importantly, it has killed innovation and delayed the roll-out of revolutionary technologies. He gives a case in point where a U.S company is sitting on a technology that can revolutionize energy sector by increasing efficiency and curbing carbon monoxide emissions. Its inventors, however, believe that investor’s greed for profits between the production period and mass adoption may throw them off tracks and thus avoid an IPO.
About Paul Mampilly
Before venturing into private practice, in what he refers to as ‘Taking the wall street to the main street,’ Paul worked in the finance investments industry. At the height of his career, he managed Kinetics Asset Management, a $25 Billion enterprise. He is, however, concerned about the concentration of wealth in Wall Street, and has since taken the initiative to educate the general public, freely, through magazines, journey publications, and seminars about how to make a fortune trading in the money markets.
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