Wall Street analysts measure companies relative to the market.
- If companies perform better than the market = WIN.
- If companies perform lousier than the market = FAIL.
CEOs, hedge fund managers, mutual funds live and die by how their performances compare to the market's (which the S&P 500 typically tracks).
WHAT THE ^^@!%^^@ DOES THAT MEAN?
Take bananas:
- You grew 10 bananas last year.
Did you do well?
Compare the 10 bananas that you grew last year to what the market (e.g., your compeititors) could do:
- If the market could only only grow 5 bananas = YOU SEX-TACULAR.
- If the market could grow 50 bananas = YOU SUCK FAIL SUCK QUIT NOW.
Why do economies keep growing?
Economies keep growing because we grow our capacities to grow more-and-more-and-more bananas each and every year.
For example, based on every $1 invested:
- Year 1: We can grow 1 banana!
- Year 2: We can grow 2 bananas!
- Year 3: We can grow 5 bananas!
- Year 4: We can grow 11 bananas!
- Year 5: We can grow 20 bananas!
- etc.
Improving technology, greater knowledge, and the increasing efficiency to grow those bananas, lead to peeps growing their capacities to produce more-and-more-and-more bananas.
For instance:
- "Cletus! Come here! This web thing will let our customers order instantaneously instead of calling our shops!"
- "CLETUS! Come here! We can keep use email newsletters to send customer notices in batches instead of calling each customer one-by-one-by-one!"
- "CLETUS JERMAINE! Come here! We can reduce our inventory levels by practicing what Toyota calls the kanban philosophy!"
Adapt Endlessly
A constantly growing economy means (unfortunately for you, but fortunately for the greater world):
- You better increase how efficient you produce your wares.
- ...because the rest of the economy is working faster-and-faster-and-faster every year to produce more-and-more-and-more for customers.
- ...and if you stay idle, others will undercut your profit margins -- eventually rendering you obsolete.
For example, take Company X.
1930s America. Company X seeks no improvement to work faster:
- 1930: Company X produces 1 banana for every $1 invested (the rest of the world produces 0.3 bananas for every $1 invested).
- 1933: Company X produces 1 banana for every $1 invested (the rest of the world produces 1 banana for every $1 invested). UH OH
- 1936: Company X produces 1 banana for every $1 invested (the rest of the world produces 3 bananas for every $1 invested). OH NOES
- 1939: Company X produces 1 banana for every $1 invested (the rest of the world produces 10 bananas for every $1 invested). OH NOES!!!!!!!!!!!!!!111111111111one
Company X dies a horrible tragedy as they fail to find more efficient ways to produce their products for their customers; meanwhile, the rest of the market does, and gives their customers more bananas for their $.
[Sidenote: The best way to be (a) unemployed in X years and/or (b) take a huge hit to your salary/earnings? Keep your skills stagnant; the rest of the market -- exploiting the advances of a more efficient economy -- will surpass you.]
So, how do you stay in business + rock?
Simply this:
- Seek ways to perform better/smarter/faster than the rest of the world.
- Repeat ^1 until the end of time.
That is, keep seeking ways to grow more bananas for every $1 invested than what the world can do with that dollar.
Be more efficient than the market (i.e., work faster, produce more, use less) = WIN.
More output.