Why some people love to shoot themselves in the foot I will never understand.
I am talking about Meredith’s interview on CNBC, which has forced me to express my strong disagreement here…
She thinks more shareholders will buy financials if they “trim” down and become more “efficient” by letting go of even more employees and paying them even less than what they are now.
Sheer farcical economic-theory!! ( I call it Meredithonomics)
For me, what financials need to focus on is attracting more clients, not more shareholders!! My philosophy is if you attract more clients, revenue goes up, profitability goes up, stock price goes up! This is not the first time I'm saying this, but essentially it is tragic to believe that a company in the services sector, can attract more clients by reducing the offering services…
What is generally agreed, as well is, even if you attract more shareholders, those will not stick around if the company is experiencing a reduced client base.
Based on Meredithonomics, financials will do better if they not diversify among many businesses but rather stick to one basic idea. My question is: what happens if that one aspect of finance the company focuses on deteriorates? Will the company experiencing this downfall be able to survive while in a state of limbo up till the day that that sector rebounds? To me, financials with no synergetic businesses to leverage and cushion a potential fall will result to having nowhere to hide and eventually destroying the long lasting business models they were built on!!
US financials are in the brink of being the de facto leaders of the world once again!! If they don’t offer more services to their clients or at the same quality of service, all the accomplishments made in the past few years will boomerang back on them in the form of a mass client exodus….
Thanks Meredith, you always have a way to make financial professionals feel inferior and disposable!