Something that has bothered me for a while is the deafening silence coming from management in defense of their companies. When their stock values are being pummeled on a daily basis, the fact that they have so little to say for themselves creates further doubt and hurts them more.
I'm not advocating talking heads with smiling faces proclaiming that everything is fine and trying to build confidence with optimistic speeches. I am advocating that they tell us what is working and what is not working, and what their short-term strategy is to ride out the storm or turn things around. When there are things they are concerned about, they should share those too.
When I write I try to be as open and forthright as possible. When I blunder I do not hide it, because my personal integrity is more important, even if it means that I appear foolish at times. The same is true for all of us, and when our business leaders and government officials do not promote disclosure and transparency, then they lose credibility, create fear and doubt, and postpone a return to stable markets.
I have written before and shouted to all who would listen that the most expensive thing you can lose is trust. You would think this would be fairly obvious to people in positions of responsibility, but somehow it does not seem to be.
People are outraged by the false promises, lies, cheating, and lack of accountability they are witnessing, and they are worried that it might get worse. As a matter of fact, when the market's dropping investors are sending a clear message that they think things are going to get worse.
When I see the stocks of General Electric (NYSE: GE) hit a fourteen-year low or Wells Fargo (NYSE: WFC) get sliced in half in ten days, I wonder why nothing is said? It leaves the impression that things are bad!
Both of these stocks are in my picks for the year, and besides making me look bad and costing me money, they are doing nothing to change market sentiment. In the absence of any company information, it is left for talking heads to speculate about how bad things really are.
If a company does not refute the negativity in the market place with supporting evidence to the contrary, then one is left to believe that the hearsay and rumors about financial difficulties might be true. Perhaps they do not even know how bad things are or when they might improve, and they have no strategy except to keep cutting costs and to accumulate data for the next quarterly report. By then the stocks will be lower still.
They should speak up. They should defend themselves, if they can, or fear will continue to rule the day.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of GE and WFC.
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Reader Comments (Page 1 of 1)
2-21-2009 @ 4:12PM
william lindblad said...
You make a good point, but considering everything that we have all seen thus far - I don't blame anyone for pulling their respective ears in.
How about a quick review - We have Congress. We have banking and finance committees in both the House and Senate. We have the Fed. We have the SEC. We have the OFHEO. We have State banking regulators. We have the FDIC. Between the elected officials, their agencies and the pseudo government Fed, there has to be THOUSANDS of employees. Therefore, all of these people were working in a sewer and nobody smelled anything? Am I the only crazy person out here?
I agree that it would be nice for exec's of stable operations to at least hint at what they think is coming, but when the heads of the big banks cannot muster more than "Duh", I don't blame anyone for keeping mum. It is the money, and nobody knows where it is at. They know they lost, but not how much. Talk about uncertainty? It is not any better on the other side of the pond either. The Brits held hearings also. Their bankers rate a little better than our as they were at least apologetic, but they don't know what the hell is going on either.
The Swiss are not talking and the 140+ year old HSBC is pushing commercials to buy CD's. Maybe they know where the money is?
What's odd in the above para?
2-23-2009 @ 9:28AM
Beltway Greg said...
Couldn't agree more but how can we get the
Chairman formerly know as Greenspan to stop speaking about his trusted LIBOR rates
and Paul Volker to pipe down about what he sees when he looks into his crystal ball? No doubt both of them commanded a lofty platform a few year ago and I bet I can find a quote from Volker which praises the complexities of our banking system and how it promoted economic efficiencies. Now he states quite the opposite. They've both become day old papers. Could someone please send them both to Miami and find a nice, comfortable place in the shade for both of them so they can sit together in their shared dotterage? And if you work for an organization could you insist that if they do indeed speak to your organization's annual picnic/shareholders meeting/wiener roast/golf outing that no press be present?
Thanking you in advance. Your pal, Beltway Greg
3-13-2009 @ 5:03PM
redhoefler said...
This article is getting pretty outdated, please update or pull it
3-13-2009 @ 5:40PM
Sheldon L said...
Red...did it ever occur to you that the CEO's speaking up now read this story!
It should stand for those in corporate management that have not gotten the message yet!