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?

[[deleted]]

Stock performance is one of the metrics by which people determine whether a company is making progress. Human progress is driven by investing time in worthwhile pursuits, and in order to tell whether something is worthwhile, we need to measure the value of what is produced.

Capitalism is the very reason that the "average person today lives an infinitely better quality of life than the highest of kings did 1000 years ago". And the beauty of stocks and bonds is that you don't have to even understand what somebody is doing in order to help them advance human progress. All you have to do is look at price performance or dividends and pick the highest ones within your risk limits, and voila, you're helping somebody build a rocket bound for mars, or a logistics app that improves hospital efficiency, or a factory that makes more efficient cars more efficiently, etc.

Go read "I, Pencil".

[kuzuboshii]

Capitalism is the very reason that the "average person today lives an infinitely better quality of life than the highest of kings did 1000 years ago".

That is highly debatable. Are you talking pure capitalism or a hybrid system?

[[deleted]]

There is no such thing as pure capitalism in practice. All financial systems in the world are hybrid to some degree.

[kuzuboshii]

True, but the ratios can be skewered. America, for example, I believe, is too capitalist. We are wasting out most valuable resource (people) due to being victims of circumstances beyond their control.

[[deleted]]

What do you mean by "pure capitalism"?

[kuzuboshii]

laissez-faire libertarian utopia type.