Stocks: Voting Machines or Weighting Machines?

Hola Todos!

I look for nuggets everywhere and recently, I’ve been listening to a lot of podcasts in the car.  Although there are a lot of podcast apps out there, I particularly like the Stitcher app, which conveniently organizes my favorite podcasts including the Harvard Business Review Ideacast, the Stanford University Entrepreneurial Thought Leaders, the American Marketing Association’s MarketingPower Podcast Series, the Social Media Marketing Podcast from the Social Media Examiner and The Talk Show by John Gruber.

The other day, I was listening to Amazon’s CEO Jeff Bezos on the HBR Ideacast and he was asked, “So how much do you care about your share price?”

Mr. Bezos responded, “I care very much about our share owners, and so I care very much about our long term share price. I do not follow the stock on a daily basis, and I don’t think there’s any the information in it. Benjamin Graham said, ‘In the short term, the stock market is a voting machine. In the long term, it’s a weighing machine.’ And we try to build a company that wants to be weighed and not voted upon.”

I’ve seen too many companies shoot themselves in the foot as they make short-term decisions to make their quarterly numbers look better without thinking of the long-term consequences of their actions.  I like this idea of “a weighing machine” as it connotes a long-term orientation.

Something to think about today…

Best regards,

Dr. Dan-o


Daniel M. Ladik, Ph.D.,

Associate Professor of Marketing

Stillman School of Business

Seton Hall University





3 thoughts on “Stocks: Voting Machines or Weighting Machines?

  1. Dr. Dan-o,
    Great quote and insight. In light of the $AAPL’s recent cliff dive, do you think this is a knee-jerk reaction from investors, or has Apple peaked?

    • Hola Chris – I think this is a knee-jerk reaction from investors as most investors are “voters.” Apple had record-breaking revenue, record-breaking profit, sold over 75 million iOS devices sold in the quarter, added 16 billion dollars in cash to the balance sheet, and outsold Android 2 to 1 in the quarter – best ever. This is why I am a marketing professor and not a finance professor. How could a firm with a P/E close to 10, zero debt, 100 billion dollars plus of CASH on the balance sheet and still get hammered by the market? I can’t explain it because it just doesn’t make any sense.

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