Goosed2: … but know that there is latittude that can be taken from his statement which also includes the last line
`` and what we want to do with shareholder valuations going forward.``
therefore it would include the sp up to the right if one thinks of shareholder valuation going forward...A higher sp is the only way to increase shareholder value..Its the only way!
Well, yes and no. Of course there is in principle a correlation between shareholder value and share price, but they are not the same. Simply put, as a company grows and expands, as its inner value increases, and as its opportunities increase, so does the shareholder value.
Overall and in the long run, the share price will reflect this. However, the share price can be WAY OFF from the shareholder value! In both direction and over rather long periods of time!
So don't expect the share price the shareholder value all the time and one-to-one! In the long run: yes, but on short term they may be totally disconnected. And it is the difference between the two that gives us investors the opportunity to benefit from. We are expecting that the share price approaches or exceeds the shareholder value, but we don't know how long it will take for that to happen.
But is of course Warren Buffet who explains the difference between share price and shareholder value better than anyone else:
"Price is what you pay. Value is what you get."
