Tuesday, May 25, 2010

Fred Schwed Jr. revisited.........

A while ago (February 10th to be exact) a quote from
Schwed's 1940 classic Where Are the Customers' Yachts? or
A Good Hard Look at Wall Street was posted, with a
promise of more to come. Here is more:

"What is the primary purpose of a business enterprise?
This question is specifically for young men considering
entering the banking field, where they will have a constant
parade of business propositions passing before them, and
they will be required to plump for a few of them and say 'no'
to the others. The answer is elementary and obvious: the
primary purpose of a business is to make money. Almost
anyone knows this with the top part of his brain. But there
are only a few valuable young men who also know this all
up and down their spinal column.

Most businessmen imagine that they are in business to
make money, and this is their chief reason for being in
business, but more often than not they are gently kidding
themselves. There are so many other things which are
actually more attractive. Some of them are: to make a fine
product or to render a remarkable service, to give
employment, to revolutionize an industry, to make oneself
famous, or at least to supply oneself with material for
conversation in the evening. I have observed businessmen
whose chief preoccupation was to try to prove conclusively
to their competitors that they themselves were smart and
that their competitors were damn fools- an effort which gives
a certain amount of mental satisfaction but no money at all.
I have even seen some whose chief interest lay in proving
this point to their partners.

So give yourself a real good mark if you know that a business
should make money, but only if you really know it."

More from Fred later.

1 comment:

  1. I'm struggling with this. Of course a business must make money. Otherwise it is a fraud on its investors. But surely that essential discipline cannot be it's purpose?

    The investor's purpose probably is to make money. But confusing the investor and the business is a very basic error, both in law and principle.