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Originally Posted by DMcCunney
Yes and no.
Focus on the next quarter's earnings at the expense of the long term health of the enterprise is a known problem. But in this case, it's not short term fluctuations we're concerned with. B&N and Borders have been in decline for a while, and before the announcement of hedge fund backing to buy B&N, I've little doubt there were pools among financial folks taking bets about just when Borders would go under,
But we are all indirectly complicit to some degree. Consider who the biggest class of investors are. Pension and retirement funds. If you contribute to a pension fund or a 401k plan, the fund's managers invest your contributions into things that will make money, to help insure the funds will be there when you collect your pension or draw against your 401k. If I am one of those fund managers, I am certainly going to be concerned with the value of stocks in my portfolio, and might very well vote yes to a takeover offer that would increase the value of a failing holding, and might sell the stock and invest the proceeds elsewhere if the value did increase. The health and continued existence of the underlying companies is not my problem. The health and value of the fund I manage is.
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Dennis
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I do recognize the fact that while Borders is in a worse dismal shape, with the help of a hedge fund, they can come up with the funding to take over a stronger rival. The problem of a public trading company is share holders like the hedge fund managers have no interest in the future of any company, any country or any people. Wall Street is littered with greed and short term profit takers. Classic healthy investment model is to cultivate a long term development plan for a company so share holders can benefit from the dividend, not solely on inflating and shorting based on stock prices. In the name of free trade, these hedge funds bought healthy companies, break them up or merge them, laid off the employees, outsource the work and destroy it bit by bit. In my opinion, Wall Street needs to be regulated to ban all short term trading.