In a crisis, investors look for ways to survive
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investors, survival March 21st, 2008SANTA FE, New Mexico: Managements often put the best possible light on the companies they run, and shareholders are inclined to accept that view, or even think things can be better. If you are not optimistic about a company, why would you want to own the stock?
But what happens when reality sets in, and managers conclude that desperate measures are needed - ones that will permanently damage the shareholders but that provide hope for survival of the enterprise, albeit with a largely different set of owners?
Among the old owners, who may have been reassured only days or weeks earlier that the situation was not as bad as it looked, the normal reaction is disbelief, followed by outrage and a refusal to believe that things are really that bad.
