President Biden has begun to accuse stores of overcharging shoppers, as food costs remain a burden for consumers and a political problem for the president.
Now then… for NEXT quarter… It doesn’t matter if they are profitable or not. Because they are publicly traded, they are going to be expected to make MORE profit than they did this quarter.
Let’s say next quarter they “only” have $890 million in profit… Most of us would KILL to be that profitable.
The stock market analysts will look at it and go “yeah, but you ‘lost’ $22 million from last quarter…” and they will punish Kroger for failing.
Even worse…
Let’s say Kroger raised their prices and pulls in a profit of $915 million next quarter… they can STILL get punished if the market goes “Yeah, but our analysts expected you to bring in $921 million in profit.”
Failing to meet or beat “expectations” is just as bad as raking in less of a profit than last time.
So prices go up, because they have to make more money than the same time last month, last quarter, last year.
And disregarding those expectations can carry personal liability for anyone in a position to do it, because the executive leadership of the company has a legal responsibility to act in the interest of the shareholders above all else.
they can STILL get punished if the market goes “Yeah, but our analysts expected you to bring in $921 million in profit.”
This happened to the company I’m in. We had record profits, were positive for the first time in years, and beat our goals by a decent bit. Stock prices tanked anyway because “the best we’ve ever done” wasn’t good enough for the shareholders.
Visited a friend in VA, she went to Kroger’s to pick up medicine and I decided to grab snacks.
A case of soda and 3 bags of chips was like $40,
When I got home, I went grocery shopping at Martin’s.
A gallon of nature’s promise milk, 3 pounds of fresh mozzarella, 2 loafs of bread, a pint of ice cream and another case of soda came out to be about the same price.
This may also be a message about how weirdly expensive junk food has gotten, but dairy is usually the most expensive items on my list
I always imagine the stockholder that trades off quarterly expectations to be someone sitting in an overly large home getting all bent out of shape because someone else’s labor didn’t make them enough money RIGHT NOW!
It isn’t one guy adjusting one portfolio relative to a single quarterly change in profits. You have to look at this as thousands of hedge funds with tens of billions of dollars in investor cash comparing Kroger to Safeway and Walmart and saying “I want 8% exposure to the cyclical consumer retail sector and I have $X-Billion to invest, how much of that do I want to distribute across these three companies?” And then if Kroger underperforms Safeway and Walmart, my algorithm tells me to sell Kroger stock and use the proceeds to buy up Safeway/Walmart.
This gives Safeway/Walmart a lower rate of effective borrowing, which means they can build new stores in territory adjacent to Kroger locations or expand into territory none of them dominate. It sets off a cascading effect in which Safeway gets to grow while Krogers treads water. Eventually, Safeway can start installing stores directly adjacent to Kroger and selling everything in this one storefront at 10% under cost-of-purchase until Krogers goes out of business from cut-rate competition. Then Safeway jacks up their prices at this one store and returns to rising profitability.
That’s the market mechanism in effect. Low lending rates mean you can drive your competitors out of business. So everyone needs to run a competitive profit margin in order to avoid getting swallowed up by their neighbors. And the folks who decide if you’re “competitive” are a handful of mega-investment banks that decide how much of your stock they’re going to buy.
So like, I’m no stock broker, but if I understand right, a company doesn’t directly benefit in any way from a higher stock price, right? They could split it, but for the most part, once their shares are bought up, the only people benefiting from the stock are rando shareholders and the handful of employees with stock options.
Executives are often paid in stock so they’re invested in seeing the price go up.
A corporation’s board of directors (who lead the company and can fire/hire executives) are also paid in stock or have very large stock holdings already.
All the people at the top benefit from seeing that stock price go higher. They care more about stock price than whether or not customers are happy, or if they’re doing right by their employees.
"The first modern stock trading market was created in Amsterdam when the Dutch East India Company was the first publicly traded company. To raise capital, the company decided to sell stock and pay dividends of the shares to investors. Then in 1611, the Amsterdam stock exchange was created. For many years, the only trading activity on the exchange was trading shares of the Dutch East India Company.
At this point, other countries began creating similar companies, and buying shares of stock was popular for investors. The excitement blinded most investors and they bought into any company that began available without investigating the organization. This resulted in financial instability, and eventually in 1720, investors became fearful and tried to sell all their shares in a hurry. No one was buying however, so the market crashed.
. . .
Although the first stock market began in Amsterdam in 1611, the U.S. didn’t get into the stock market game until the late 1700s. It was then that a small group of merchants made the Buttonwood Tree Agreement. This group of men met daily to buy and sell stocks and bonds, which became the origin of what we know today as the New York Stock Exchange (NYSE).
Although the Buttonwood traders are considered the inventors of the largest stock exchange in America, the Philadelphia Stock Exchange was America’s first stock exchange. Founded in 1790, the Philadelphia Stock Exchange had a profound impact on the city’s place in the global economy, including helping spur the development of the U.S.’s financial sectors and its expansion west."
That’s not the interesting part. The interesting part is that the Dutch East India Company was under a legal charter where they could make war with and enslave whoever they wanted to as a quasi-independent entity.
That’s what the stock market concept is based upon. Slavery and murder.
I mean, that’s a bit unfair. The stock market is a concept that’s based on expected annual growth paid out in a steady return on investment. Slavery and murder just happen to be incredibly lucrative industries, such that you could confidently invest in firms like Dutch East India and expect more than you put in.
Pick up a copy of Picketty’s “Capitalism In the 21st Century” and you can see how this played out over the long term. Prior to Capitalist market mechanics, you’d have these feudal estates that would levy rents with a steady-state expectation of returns. You had 10,000 acres being worked by 100 farmers and they tithed you their surplus in food. You warehoused that food and traded it back to them for their labor, with which you built churches and castles and recruited soldiers for your next war. But the real economy was stagnant, outside fluctuations in population from plague or invasion or natural disaster.
Then you get this idea of cumulative return on investment, and there’s this sudden rapid expansion of commerce and capital that simply had no historical parallel. This didn’t need to be predicated on bloodshed or occupation. The textile industry boom in the UK, for instance, was this more-or-less bloodless conflagration of productive forces. Huge industrial looms turned a desperately scare resource into a cheap consumer commodity within a span of a few decades. And a big part of that was the feedback loop of investment -> capital production -> lucrative returns -> re-investment.
Similarly, the boom in agricultural productivity thanks to the advent of modern fertilizers has functionally ended natural famines. This was, incidentally, a knock on effect of the Loom Boom, as the first industrial fertilizers were derived from pesticides which were derived from clothing dyes.
The pain and suffering that followed the Dutch East India Company was not a consequence of the market mechanic nearly so much as it was the consequence of an aristocracy with no countervailing force among the proles. It was consistent with the behavior of lords and kings going back thousands of years, just industrialized.
The problem is the way the system is rigged.
Kroger is a publicly traded company, their stock price right now is 46.71 / share.
You can see their most recent earnings report here:
https://ir.kroger.com/news/news-details/2023/Kroger-Reports-Third-Quarter-2023-Results-and-Updates-Guidance/default.aspx
Operating Profit of $912 million; EPS of $0.88
Now then… for NEXT quarter… It doesn’t matter if they are profitable or not. Because they are publicly traded, they are going to be expected to make MORE profit than they did this quarter.
Let’s say next quarter they “only” have $890 million in profit… Most of us would KILL to be that profitable.
The stock market analysts will look at it and go “yeah, but you ‘lost’ $22 million from last quarter…” and they will punish Kroger for failing.
Even worse…
Let’s say Kroger raised their prices and pulls in a profit of $915 million next quarter… they can STILL get punished if the market goes “Yeah, but our analysts expected you to bring in $921 million in profit.”
Failing to meet or beat “expectations” is just as bad as raking in less of a profit than last time.
So prices go up, because they have to make more money than the same time last month, last quarter, last year.
And disregarding those expectations can carry personal liability for anyone in a position to do it, because the executive leadership of the company has a legal responsibility to act in the interest of the shareholders above all else.
This happened to the company I’m in. We had record profits, were positive for the first time in years, and beat our goals by a decent bit. Stock prices tanked anyway because “the best we’ve ever done” wasn’t good enough for the shareholders.
Visited a friend in VA, she went to Kroger’s to pick up medicine and I decided to grab snacks.
A case of soda and 3 bags of chips was like $40,
When I got home, I went grocery shopping at Martin’s.
A gallon of nature’s promise milk, 3 pounds of fresh mozzarella, 2 loafs of bread, a pint of ice cream and another case of soda came out to be about the same price.
This may also be a message about how weirdly expensive junk food has gotten, but dairy is usually the most expensive items on my list
It’s all so dumb. I’m sorry for the language, but it’s just really, really dang dumb. There, I said it.
I always imagine the stockholder that trades off quarterly expectations to be someone sitting in an overly large home getting all bent out of shape because someone else’s labor didn’t make them enough money RIGHT NOW!
It isn’t one guy adjusting one portfolio relative to a single quarterly change in profits. You have to look at this as thousands of hedge funds with tens of billions of dollars in investor cash comparing Kroger to Safeway and Walmart and saying “I want 8% exposure to the cyclical consumer retail sector and I have $X-Billion to invest, how much of that do I want to distribute across these three companies?” And then if Kroger underperforms Safeway and Walmart, my algorithm tells me to sell Kroger stock and use the proceeds to buy up Safeway/Walmart.
This gives Safeway/Walmart a lower rate of effective borrowing, which means they can build new stores in territory adjacent to Kroger locations or expand into territory none of them dominate. It sets off a cascading effect in which Safeway gets to grow while Krogers treads water. Eventually, Safeway can start installing stores directly adjacent to Kroger and selling everything in this one storefront at 10% under cost-of-purchase until Krogers goes out of business from cut-rate competition. Then Safeway jacks up their prices at this one store and returns to rising profitability.
That’s the market mechanism in effect. Low lending rates mean you can drive your competitors out of business. So everyone needs to run a competitive profit margin in order to avoid getting swallowed up by their neighbors. And the folks who decide if you’re “competitive” are a handful of mega-investment banks that decide how much of your stock they’re going to buy.
So like, I’m no stock broker, but if I understand right, a company doesn’t directly benefit in any way from a higher stock price, right? They could split it, but for the most part, once their shares are bought up, the only people benefiting from the stock are rando shareholders and the handful of employees with stock options.
The stock price determines the overall value of the company and has all kinds of ramifications, purchase ability, loan agreements, etc. etc.
Ah, I see. Interesting.
Adding to this:
Executives are often paid in stock so they’re invested in seeing the price go up.
A corporation’s board of directors (who lead the company and can fire/hire executives) are also paid in stock or have very large stock holdings already.
All the people at the top benefit from seeing that stock price go higher. They care more about stock price than whether or not customers are happy, or if they’re doing right by their employees.
abolish the stock market. put these hogs on a fucking island with no natural resources but sand and salt water. set up a camera and let us watch.
The problem is that a bunch of the hogs are our retirement funds.
We need to remove the middle-men from the equation and institute guaranteed basic income before we can change it.
It’s interesting how recent the stock market really is:
https://www.sofi.com/learn/content/history-of-the-stock-market/
"The first modern stock trading market was created in Amsterdam when the Dutch East India Company was the first publicly traded company. To raise capital, the company decided to sell stock and pay dividends of the shares to investors. Then in 1611, the Amsterdam stock exchange was created. For many years, the only trading activity on the exchange was trading shares of the Dutch East India Company.
At this point, other countries began creating similar companies, and buying shares of stock was popular for investors. The excitement blinded most investors and they bought into any company that began available without investigating the organization. This resulted in financial instability, and eventually in 1720, investors became fearful and tried to sell all their shares in a hurry. No one was buying however, so the market crashed.
. . .
Although the first stock market began in Amsterdam in 1611, the U.S. didn’t get into the stock market game until the late 1700s. It was then that a small group of merchants made the Buttonwood Tree Agreement. This group of men met daily to buy and sell stocks and bonds, which became the origin of what we know today as the New York Stock Exchange (NYSE).
Although the Buttonwood traders are considered the inventors of the largest stock exchange in America, the Philadelphia Stock Exchange was America’s first stock exchange. Founded in 1790, the Philadelphia Stock Exchange had a profound impact on the city’s place in the global economy, including helping spur the development of the U.S.’s financial sectors and its expansion west."
That’s not the interesting part. The interesting part is that the Dutch East India Company was under a legal charter where they could make war with and enslave whoever they wanted to as a quasi-independent entity.
That’s what the stock market concept is based upon. Slavery and murder.
I mean, that’s a bit unfair. The stock market is a concept that’s based on expected annual growth paid out in a steady return on investment. Slavery and murder just happen to be incredibly lucrative industries, such that you could confidently invest in firms like Dutch East India and expect more than you put in.
Pick up a copy of Picketty’s “Capitalism In the 21st Century” and you can see how this played out over the long term. Prior to Capitalist market mechanics, you’d have these feudal estates that would levy rents with a steady-state expectation of returns. You had 10,000 acres being worked by 100 farmers and they tithed you their surplus in food. You warehoused that food and traded it back to them for their labor, with which you built churches and castles and recruited soldiers for your next war. But the real economy was stagnant, outside fluctuations in population from plague or invasion or natural disaster.
Then you get this idea of cumulative return on investment, and there’s this sudden rapid expansion of commerce and capital that simply had no historical parallel. This didn’t need to be predicated on bloodshed or occupation. The textile industry boom in the UK, for instance, was this more-or-less bloodless conflagration of productive forces. Huge industrial looms turned a desperately scare resource into a cheap consumer commodity within a span of a few decades. And a big part of that was the feedback loop of investment -> capital production -> lucrative returns -> re-investment.
Similarly, the boom in agricultural productivity thanks to the advent of modern fertilizers has functionally ended natural famines. This was, incidentally, a knock on effect of the Loom Boom, as the first industrial fertilizers were derived from pesticides which were derived from clothing dyes.
The pain and suffering that followed the Dutch East India Company was not a consequence of the market mechanic nearly so much as it was the consequence of an aristocracy with no countervailing force among the proles. It was consistent with the behavior of lords and kings going back thousands of years, just industrialized.