Friday, January 20, 2012

How it all works - and doesn't

Did you see this article the other day?

Hilary Kramer offers seven companies to watch and reasons why.  These companies appear to "drive" the market. 

That's an interesting concept.  Companies that are driven by consumers drive the market.  Those that get driven by the consumers most post big earnings or earning that match expectations (because all that's relevant to the market is already included in the share price - efficient market hypothesis).  But, is that supposed to be revolutionary?  People like stuff.  They buy the stuff they like.  Those things they don't like don't get bought (unless regulations are imposed forcing you to buy those undesirables).  The companies that sell more often reinvest more.  Those that reinvest more grow larger and can reach more consumers who might also like that company's stuff.

Yes, that's a characterization of the process.  Nevertheless, the companies that are big and sell stuff that the world wants and needs most are going to post bigger earnings than those that don't (if their pricing isn't at a loss, lawsuits don't destroy, IP isn't infringed upon, etc.).


Don't try to sell people things they don't want.  If they should want it, learn to make a good argument for why they should.  Until you sell them that, you won't sell them the product.  And, that thing they should want should be made and marketed excellently.  Don't expect people to buy an excellent idea.  Everyone can think up excellent ideas and brainstorm creative solutions.  The winners manifest those ideas and make them available.

See Nike

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