[ad_1]
Photography by Daniel Acker / Bloomberg
Text size
Earlier this week, leaders of 181 large companies decided that maximizing shareholder value was no longer the primary goal of modern business.
The redefined role, announced at a time when many people are worried about the recession and their portfolios, is to promote an economy that serves all Americans.
The new principles were reiterated in a statement of the Business Roundtable that could be called "awakened capitalism". If the deployment is done properly, it could even convince millenarians – and members of the US Congress – that big corporations are not all bad.
Heads of business in companies such as
Amazon.com
(ticker: AMZN),
Apple
(AAPL)
BlackRock (BLK)
,
and
Walmart
(WMT) signed the roundtable statement on "the goal of a company". It is good to know that the masters of corporate politics recognize that others struggle to fend for themselves, that hard work is often not rewarded and that we are not doing enough to help workers adapt to changes.
The principles could even possibly help humanize businesses and make them more attractive to millennials who like to invest with their values, unlike economist Milton Friedman, who thought companies existed to maximize returns for shareholders.
The only problem of principles that deserves to be monitored by other investors is a sign of leadership to generate long-term shareholder value. Some CEOs regretted that focusing on short-term quarterly results undermines their ability to focus on long-term issues that benefit society. If the round table commits to changing the frequency of corporate results or changing the basic relationship with investors, a new day will really come up.
Until then, anyone who wants to invest in a company that embodies the new principles of the roundtable can consider
Costco wholesale
(COST), the warehouse club reserved for members. His CEO was not a signatory to the roundtable, which is ironic given that Costco was criticized by Wall Street for paying too much for workers and not doing enough to maximize earnings. The former complaints have eased somewhat, with Costco's shares advancing by around 35% this year, outperforming the S & P 500 by 17%.
Costco is often cited as a good, safe place to wait for the trade war. A recession could weigh heavily on equities, but if the belts tighten, you can say a lot to buy wholesale and save money.
A good approach based on a principled roundtable should involve a commitment to buy down the stock and a willingness to be a long-term supporter. At the same time, there is nothing wrong with taking advantage of a slight rise in the short term.
This last goal can be achieved by selling downward put options and buying up calls. The fairer of you can even buy shares. Time is running out, especially since Costco will release its fourth quarter results on October 3rd.
When the stock was $ 275.15, investors could sell Costco's $ 270 October positions at $ 7.10 and buy the October 280 buy at $ 7.20. (The value increases when the price of the underlying security decreases, while the call increases when the price of the underlying increases.) The so-called risk reversal transaction encourages investors to buy shares at $ 270 and benefit from them if the price of the stock rises above $ 280. Over the past 52 weeks, the stock has ranged from $ 189.51 to $ 284.31.
The main risk to trade is that the stock is below the strike price at maturity, which could happen if future profits and forecasts were very bad or if the market was shattered by the trade war , a reverse yield curve or fears of recession. If the stock is $ 260, investors must buy the stock at $ 270 or cover the put at a much higher price.
If the trade goes bad, understand the social meaning of your lost money. People on the other side of your business, the fierce US market makers, are often struggling. Lately, they have struggled to make ends meet in this volatile and unpredictable market where corporate executives have aligned themselves with social justice, even as the US President continues to tweet about interest rate cuts. .
E-mail: [email protected]
[ad_2]
Source link