Consequences of liquidating an ira
One consultant aptly termed this phenomenon the “MBA syndrome,” in which, under the guise of strategic planning, management becomes cautious and is not willing to gamble on anything short of a sure thing.
Management finds it safer to relegate the problem to another study than to take action.
Bureaucratic analyses are replaced by a tendency to “let the market prove it.” If an idea/product does not work, it is discarded and another is implemented.
This attitude has an important effect on motivation, which quickly translates into the high profitability and rising stock prices of the smaller companies.
We’ve reviewed some important evidence that small companies outperform large companies by a significant margin.
We’ve also offered some commonsense reasons why the smaller companies afford superior capital-gains potential to investors.
First, the company has a margin of safety if it does not have high interest expenses.
According to Banz, the size effect demonstrates the inverse relationship between size and effectiveness.
Larger companies, with more staff, better finances, and an established track record, perform better than the small upstarts. We feel one reason larger companies do not perform better is the inverse relationship between size and innovation.
Banz discovered that over a 50-year period the stocks of the smallest 20% of the NYSE firms have, on average, outperformed stocks of the largest 20% of the NYSE firms by a significant margin.
In fact, the small stocks performed almost four times better than the market.