“I tried to figure out what made a public company different.
Here is what I came up with — the central bankers of the world, all acolytes of Keynes, have decided that it is the P in PE that brings wealth when we all know, as business people, in a normal environment it is the E.
This has created such an intense group of booms and busts that executives and boards see themselves as Bubble Riders, searching the capital horizon for the next bit of Animal Spirits- driven speculation to send their stock skyward. This seems easier than creating a good and sustainable business that offers a return to shareholders, regardless of the current PE the market offers. Why create a business where there is a cost of capital when you can create one where capital is as free as hot air?”
Aram Fuchs of Fertilemind Capital in NYC sent me his annual letter to shareholders. What a great read. Rare are the fund managers (and business owners, and CEOs, and investors) who actually look at business “the old fashioned way” – as a way to earn sustainable profits over time (as opposed to looking for fast buck liquidation events and growth at any cost strategies).