You are talking about fundamentals, I think, and we know that other stuff whips share prices from pillar to post. If my shares pay no dividends, or if dividends relative to my cost are less than the firm's 'profit rate,' whatever that is, then my returns are partly or entirely due to changes in share prices. So there is still a thick filter between shareholders and managers, I would say. Downsizing, for instance, sez my boss who looks at that stuff, has not panned out in long-run profits for companies, but evidently, say I, it boosts share prices. In the long run there ought to be a reckoning, but in the long run blah blah blah.
mbs
Much care needed here. You need to be considering your *own* return on invested capital, not the company's. If the company is making 30% on book equity but you pay three times book for it, you're getting less bang for your buck than if it makes 10% and you pay half book.
dd
===== ... in countries which do not enjoy Mediterranean sunshine idleness is more difficult, and a great public propaganda will be required to inaugurate t. -- Bertrand Russell
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