Your returns depend on the CEOs you invest with
Not surprisingly, what’s happening in a CEO’s life impacts the performance of their company and it’s stock price. A September 5th article in the Wall Street Journal by Mark Maremont highlighted this fact, recently.
Several studies have shown that a death in a CEO’s family negatively impact the company’s stock price. The death of a child resulted in an average loss of 20%. The death of a spouse led to a 15% slip in price. Amusingly enough, the death of a mother-in-law led to a 7% rise in stock price.
Other studies showed that the stocks of companies run by CEOs who buy or build megamansions sharply under-performed the market. This hardly seems surprising to me, but it’s good to see the statistical backing.
Another study showed that narcissistic executives, those who tended to take all the credit for what their companies accomplished, tended to take greater risks that led to bigger swings in company profitability.
Although I’ve never done a statistical study of these issues, I’ve always looked hard at the leaders of the companies I invest in. Not only does this result in better investment results, on average, but it also allows me, and my clients, to sleep better.
Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.