In the original version of his book The Intelligent Investor, Ben Graham began his discussion of a chapter on “The Investor as Business Owner” by pointing out that, in theory…
“…the stockholders as a class are king. Acting as a majority they can hire and fire managements and bend them completely to their will.”
But he changed this part in the subsequent editions of the book. In practice, says Graham…
“…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be.
The only way to inspire the average American shareholder to take any independently intelligent action would be by exploding a firecracker under him.”
Well, this is a fact that is true for not just American shareholders, but all shareholders. Most of us overlook the human aspect of operating a business. This is despite the fact that, in most cases, the future success of a business is directly tied to the quality of its people.
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