This is the frustrating thing reading these comments, where people seem to assume that any profit margin is good enough to sustain a business.
replyPeople see a 3% return and think, "Well, they aren't losing money so there is no reason they can't just keep doing business as usual." What this idea is missing is that the investors in a company aren't choosing between "keep my money in this company" and "sit on the cash", they are choosing between "keep my money in this company" and "invest my money somewhere else"
In other words, you aren't just looking at direct returns on an investment, you also have to think of the OPPORTUNITY COST of the investment. By keeping their money invested in a business making 3% returns, they can't invest that money somewhere else.
So basically: The stock market is cancer.
replyIt's more like evolution through natural selection. If you can buy a treasury that returns 3.6%, you will NOT invest money in a business that has more risk, is only returning 3%, and has no believable growth story. Even worse, if you own shares in that company, you will sell them and shift the investment dollars to something with better returns or better chance for growth.
replyIt's this competition that leads to prosperity, the alternative is central planning which leads to poverty.
Talk about frustration reading these comments. People knee-deep in Kool-aid, thinking this is the only and god-given way things should be.
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