Chartwell Law Firm - Ken Lay, Enron & Etfs
Hello everybody. Today, I learned about Chartwell Law Firm - Ken Lay, Enron & Etfs. Which may be very helpful in my opinion and you. Ken Lay, Enron & EtfsThe painful story of Ken Lay and Enron offers us many lessons on management and investing. My personal view is that Mr. Lay was a good man who got a bit carried away and made a few key mistakes. He should be judged on his total work as an innovative menagerial and kind contributor to his community and not just on the missteps that lead to the implosion of Enron.
What I said. It just isn't in conclusion that the actual about Chartwell Law Firm. You see this article for home elevators what you need to know is Chartwell Law Firm.Chartwell Law Firm
I first met Ken Lay and the Enron style of business while representing the United States on the menagerial Board of the Asian amelioration Bank in Manila. Manila was experiencing severe power blackouts and Enron won one of any fast-track contracts offered by the Philippines's Government to add generating capacity fast at nice fat margins. While 1994-1995, I joined Enron to help institute Asian power projects.
At that time, Ken Lay and Enron were both rising stars and darlings of the venture community.
All too often, investors forget that the most important factor to consider in evaluating a business is the quality and character of management. You can have the best products, lucrative and profitable markets and the best balance sheet but if management is faulty the whole story and stock price will crumble.
A connected issue is the set up of a company's board of directors and either it is independent and offers strong oversight of management. Another important factor to consider is the culture of the company. Are economic incentives offered to management and staff intimately aligned with shareholder interests?
Finally, is the business easy to understand and are operations and financial statements transparent so investors can value the value and profitability of the company.
Unfortunately, Enron failed all four tests. Let's briefly look at each failing.
First, when I was with Enron, Mr. Lay had a strong and very capable Coo Rich Kinder who made sure the trains ran on time. It was an effective partnership. Ken Lay was Mr. Covering and Rich Kinder was Mr. Inside. But the capable Kinder was not going to wait forever to come to be Ceo and apparently for personal reasons Mr. Lay blocked his appointment as Ceo important to his eventual departure to form the extremely victorious pipeline business Kinder Morgan. Eventually, Mr. Jeffrey Skilling was appointed Ceo and while he is enchanting and hard driving, he lacked the character, taste and menagerial abilities required for the position. In retrospect, this should have been a red flag for investors. When Skilling instantly left the business in 2001, Mr. Lay came back to the Ceo position without apparently knowing adequate of the details of Enron's financial problems and mismanagement.
Second, Enron's Board of Directors was comprised mainly of allies and friends of Mr. Lay and did not adequately oversee Enron management and operations. Shareholders should have seen that this was the case and demanded more say in the appointment of experienced and independent board members as a check on management.
Third, the culture of Enron was very short-term oriented. Astronomical bonuses were connected to demanding but short term carrying out goals which led to employees leveraging shareholder capital for projects that sometimes did not make long-term sense. My perception was that for many employees, Enron was an occasion to try to make a lot of money and then go do something else. The qoute was that they weren't using their own money to finance their entrepreneurial activities but rather shareholder's money. Cfo Andrew Fastow was just one example of the problem.
Finally, Enron's trading performance and so-called innovative financing techniques were so involved and opaque that even experienced Wall street analysts could not figure out how or if Enron was making money. Therefore when questions arose about definite questionable financing transactions, investors lacked belief to hang tough through the turbulence and headed to the exits at once. Investors had piled into Enron stock without even understanding its business and the risks inherent in its business.
Well that is my understanding what went wrong with Enron and investors in Enron but what does all this have to do with Etfs?
First, if Ken Lay had had a balanced global Etf briefcase instead of such a high attentiveness of Enron stock in a margin account, he may have faired good in court. A key fee against him was that as the stock price fell, he was selling Enron stock while he publicly was stating that he was buying it.
For investors, it is logical to ask how they can be startling to compare the quality of management, board oversight, the culture and incentives for employees and understand all the fine print in financial statements. The riposte is that the vast majority of investors have neither the taste nor time to do so.
What if instead of buying a too much Enron stock, investors would have just spread their power bets over a basket of power companies by buying an power Etf such as the S&P Global power (Ixc) Etf? Even at its peak market capitalization, Enron would have been at best 6-7% of the basket. Even good if the investor has a trailing stop loss in place to lock in gains or limit losses.
If you have the time and inclination, go ahead and do some stock picking but keep the lessons of Enron and Ken Lay in mind and put the core of your global briefcase in Etfs.
I hope you obtain new knowledge about Chartwell Law Firm. Where you'll be able to put to use in your evryday life. And above all, your reaction is passed about Chartwell Law Firm.
0 comments:
Post a Comment