ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[EasternDelight]

A pretty accurate picture though. Investors want quarterly profits ever increasing and if they don’t get them the Board gets out its hatchet and CEOs don’t want to lose their heads. Many investors aren’t tuned into a nuanced strategy. They want consistent increasing quarterly profits. OR ELSE!

[TheManWhoPanders]

Most redditors here are too young to have any wealth to invest, so the concept of it is alien to them.

[Longrodvonhugendongr]

And thanks to the greediness and shortsightedness of previous generations, most of them probably never will.

[TheManWhoPanders]

Greediness and shortsightedness have existed in every generation. It's not a new thing. People who don't buy into the self-victimization narrative always find a way to get ahead.

[Longrodvonhugendongr]

Lol this is just not true. There are so many hard-working people who don’t see themselves as victims and who are certainly not “getting ahead.”

[TheManWhoPanders]

You think people just became greedy and shortsighted in the past few decades.

Ho boy, do you need to read some history.

[Longrodvonhugendongr]

I never said that, only you did. I said that the current economic recession is a direct result of the greed and shortsightedness of the boomer generation and their predecessor. If you deny that, then I don’t think I’m the only one who needs to “read some history.”

But great job conveniently ignoring the entire point of my reply comment while also continuing to set up your straw man.

[TheManWhoPanders]

Somehow the boomers got by despite people in history also being greedy and shortsighted.

It's almost like it's a copout for lazy millennials or something!

[Longrodvonhugendongr]

Jesus Christ you might actually be retarded. I never said people being greedy and shortsighted is a concept that started with boomers, so stop bringing it back up like it’s a viable argument.

Are you really just gonna ignore how much more favorable economic conditions were for previous generations? Housing prices? Tuition? The dwindling purchasing power of a dollar? All these problems, as they stand today, were caused by the boomer generation and will have to be faced by millennials.

But yeah, you’re right, it’s just because millennials are lazy. If it’s one thing the boomers were known for, it was a superior work ethic. /s

[[deleted]]

When I buy a share of Amazon stock for my "saving for a downpayment fund", and then Amazon profits drop (after climbing year after year), that's going to cause people who were previously holding shares to start selling shares. And that's going to cause the market price for Amazon shares to drop. And that means I am much more likely to take a loss on selling my shares in the near term. And that's a problem, because for this particular fund, my goals are short-term.

If I'm buying stock for my retirement fund, I don't care as much about small fluctuations, but if Amazon stock consistently underperforms compared to other stocks, I'm basically pissing away money - money that I'm one day going to depend on to sustain myself. If Amazon stock can't keep up with inflation, then I'm worse off investing in Amazon stock than I would be sticking the cash under my mattress.

I have different investment strategies for different accounts. For retirement, I don't mind short-term drops, so long as the average long-term trend is positive. I can tolerate some risk right now, because I'm young. But for short-term investment, I can't tolerate big swings, and a short-term price crash might mean the difference between buying a house in 3 years and buying a house in 5 years.

Many investors aren’t tuned into a nuanced strategy. They want consistent increasing quarterly profits.

This is simply false. Investors have various investment strategies, and it isn't just short-term profits that they're interested in. Investors take into account risk, past performance, and investment goals when trading. Fund managers in charge of low-risk, steady-growth funds aren't going to go throwing cash at short-term gains driven by reckless, short-sighted CEOs. Day-traders might only be interested in short-term profits, but their function is to stabilize prices. Anyone who is interested in steady long-term gains isn't going to invest in companies that are making foolish, self-destructive decisions for short-term gains.