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On Mon, Oct 30, 2017 at 4:28 PM, Mick <michaelkintzios@×××××.com> wrote: |
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> On Monday, 30 October 2017 21:04:00 GMT Rich Freeman wrote: |
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>> On Mon, Oct 30, 2017 at 4:50 PM, Dale <rdalek1967@×××××.com> wrote: |
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>> > have we profited on today'. However, when a company is public, stocks |
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>> > and such, then it is about what have we made today with no one caring |
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>> > about years from now. After all, the people owning the stocks may not |
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>> > even own them next week. |
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>> |
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>> Nor should they be concerned with the long-term. |
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> |
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> Not all shareholders flip their stock in milliseconds to front-end retail |
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> investors in market movements. There are also few(er) long term investors, |
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> but they have been crowded out by big banks and hedge fund algo desks. |
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|
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If the big banks thought that investing for the long term would make |
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them more money they would do it. They have no loyalty to the |
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companies they invest in. If they can invest in a company one month, |
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and make more money by investing in a competitor that will put them |
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out of business the next month, they will. I'm not sure why a "long |
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term investor" wouldn't do the same if they could make money doing it. |
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They have money for the long-term, but that doesn't mean that they |
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have to keep it in once place. |
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|
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I think liquidity was what ultimately killed long-term investing. |
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That and a lack of information. Unless you decide to go the Buffet |
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route and actually take over the management of a company it is really |
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hard to tell if a company is eating its seed corn. With the modern |
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market where you can sell millions of dollars of shares in a |
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microsecond with a reasonable spread there is rarely a reason to stick |
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with a company if you have even a speck of doubt as to its future. |
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And then of course there is the trend towards passive investing. |
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Ironically there the investments actually do tend to be long-term in |
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the same companies but the investors don't even care what the earnings |
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of those companies are - they'll hold the stock as long as most other |
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people are also holding the stock. |
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|
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Also, the long term is probably not the main issue here as much as the |
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focus on the public good. A utility that doesn't engineer for |
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reliability isn't thinking short-term, they're just maximizing profit. |
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If things break they can just fix them after they break. Maybe a |
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hospital is out of power for a week, but that probably doesn't cost |
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the utility as much as preventing the outage. The utility isn't going |
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to go out of business - they're still in it for the long-term. This |
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is why you need regulators that look out for the public good. |
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|
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>> This should be the |
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>> role of the regulator. If the regulator wants spare capacity, then |
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>> they should take bids for companies to have spare capacity available |
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>> and they get paid to just sit on their excess capacity. If the |
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>> regulator wants more redundancy in the transmission network then they |
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>> should set specifications for what is desired and take bids from those |
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>> able to build it out. If the regulator wants everything to be |
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>> replaced within a certified lifetime based on testing then they should |
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>> specify this, and take bids from those willing to maintain the grid to |
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>> this standard. |
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> |
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> The problem is the regulator is typically a toothless entity, a paper tiger, |
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> put in place to apply soft touch intervention by issuing corrective notices, |
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> when step-in required to curtail the abusive behaviour of market participants |
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> is long overdue. |
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> |
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|
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Sure, but there is no solution to this problem other than the public |
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taking attention and fixing the regulator. The same issues would |
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exist with a public utility. You can't compare a well-run public |
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utility to a poorly-run regulator of a private utility. |
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|
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> Even worse, on the usual design-build-operate contracts they are often |
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> motivated to undercut reliability for a more competitive price, hoping to bail |
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> out of the operate part just as the infrastructure is about to fall apart. |
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|
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Oh, they won't bail out. They'll happily offer to sell their services |
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to fix the mess. That actually is long-term thinking. Anybody |
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looking to buy-and-hold utility stocks should be looking for |
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opportunities to invest in companies that have planned obsolescence |
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like this with regulators willing to let them get away with it. :) |
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|
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-- |
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Rich |