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Tuesday, May 29, 2018

Putting Our Money Where Our Values Are-The Problem with Stock Market and Strategic Decisions

We are moving toward a trade war with China and the Down Jones Industrial Average tumbles 400 points. Perhaps a small bump or something more substantial. We can say that much of our lives in business, government and even national security is based on stocks and large investors. From the beginning of borrowing there has been the ability to influence national decisions based on money alone.

History has shown that some countries have been toppled and experience political insecurity based on debt loads and investment. A few spots in history have shown (i.e. Mexico independence) that not paying debt can lead to invasion. While the world has partially advance from these draconian methods we are still stuck to the same puppet strings.

That is not an argument for or against trade restrictions or even a trade war. It is a concern that perhaps we are too run by money and the whims of the investment class. Some level of insulation is needed to ensure companies and countries can make long-term decisions that are in the best interest of their security.

Investors are not always all wise or all seeing. They make quick decisions in order to recap on money and eek out profits. There are times when long-term strategy doesn't filter beyond their limited scope of perception. A seemingly poor short-term decision can have an immediate impact on the market and investment.

For those making the decisions it means constantly watching stock prices and adjusting the books to ensure there isn't a fall out. Not all of this is bad. The market has the ability to push for more openness with trade and more fiscally sound decisions. It does that in the long-run but sometimes misses the mark with the steps needed to get there in a time frame wanted by the investors.

It does have a great amount of power to control events by people who may not have a stake in those events in the same way as people who live within a particular country or within a business. For example, if a long-term decision is unpopular a CEO may have to adjust their strategy to please investors when this may not be the wisest decision. They may be thinking 50 years down the road and not 3 or 5.

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