MIUZU

Company valuations need a new paradigm.  The driving forces of securities investment need reinvention.

In  a brilliant piece in the Financial Post, Roger Martin (Dean of U of Toronto’s biz school) illuminates the hazards implicit in the current market orientation toward expectations rather than results.  Read the article now!  He articulates so well how business stakeholders, almost always equipped with company stock, will favor the growth of shareholder value – sometimes at the expense of the long-term viability of the company.  Part of the reason the economy is in such a pickle is because the perception of future value has fallen so out of touch with real market value…or authentic potential future value.  Either expectations are wildly oversold, or wildly undersold.  And the incentive systems in place reward deceptive practices by those in the best position to influence broad opinion.

In retrospect, there is more to say about the benefits available in a re-orientation as suggested.  Imagine the effect on innovation; the birth and commercialization of new ideas…

Today, the bulk of securities investment is directed toward the upticks and downticks of stable, and generally successful companies – and whose balance sheets are largely unwavering.  The big wins have already been won.  The company is already mainstream.

Yet, there are so many small companies with important ideas and revolutionary commercial propositions that are desperate for capital, and cannot find it.  They possess the greatest real market growth potential.  We’ve all heard the cliches: “imagine if you bought Microsoft in ’84.”

Forgive me my bias – we’re loaded with potential and short on cash.

Now, imagine how innovation would spike and how the competitiveness of the economy would be invigorated, if the influx of investment capital went to the real market growth opportunities.

It would be a very different world.  And a whole lot more exciting.

Dave