Extreme Capitalism

Enterprises go out of business mostly for one of two reasons: they don't make a profit; or they don't make enough of a profit. By enough, we mean not enough to attract investment capital. If an enterprise cannot attract investment capital, it more or less gradually goes out of business.

In this era of information technology, savvy investors, fine tune their portfolios at light speed to achieve the maximum return. They want big, fat returns and they don't care if they are buying or selling, or what sort of real-world undertakings are going on underneath their trading.

A lot of financial engineering (a.k.a. leveraging) that went on during the recent boom years, was an effort to sex-up rather prosaic businesses to make them more attractive investments to the hot money. Most of those efforts failed rather spectacularly and the hot money has moved on. Where to, we wonder? Wherever it is, money will be made, and capital will fall into stronger hands than the lumpeninvestor.

We suggest that if you are an investor, you take care that your investing strategy is as careful, rational, and sophisticated as you can manage. Just flinging your money into "housing" or "the stock market" isn't going to cut it any more. It was a great ride while it lasted, but it's time to move on.