"The public market is a voting machine in the short term, weighing machine in the long term," said Randall Abramson, Trapeze Asset Management. This quote came from one of Randall's favorite economic experts, Benjamin Graham, who was also one of Warren Buffet's mentors. Randall was going through his company's rational for investing, and running a demonstration of their extraordinary algorithm which made sense. Showing Disney's stock journey over the past few decades, gave a compelling snapshot to back up Randall's view that good investing is about value and digging deep to find undervalued companies. There were many opportunities to buy a seriously undervalued Disney stock and other times when the stock was too over priced to be an attractive investment.
The message was clear: fickle public opinion does not out perform the long term value of a business.
The public market has been a voting machine for future success, based on the talent and innovativeness of the management team and their employees and resources. The long term focus has been damaged though, as bubbles hammer good companies who do not deserve to have their stock reduced due to the foolishness of other businesses forgetting good business practices. The crash hurt sensible, wise investors with its sudden plunges.
This volatility of stock price, which is mostly out of the control of management, is the number one reason given by CEOs for frustration with public markets. Harvard reported that 88% of CEOs preferred running a private business without the pressure.
Jacoline Loewen, author of Money Magnet: Attract Private Equity Investors to Your Business