The Value of Nothing: Capital versus Growth

Although a large proportion of American companies have incredibly high valuations, they’re not actually contributing to growth. Even though there’s more profit (and therefore, capital) to go around, many American companies are increasingly hesitant to invest it into innovative ventures, supposedly out of fear of the high risk, low reward profile. Instead, they would much rather restructure and divest in order to preserve their high return rate; “(e)liminating profit streams can actually increase shareholder returns when the remaining company trades at a higher valuation”. Read full article here

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