Why, people ask, does corporate governance break down in soaring stock markets? Is it, as some have suggested, that people simply get greedier?


No. The simple fact is, when the demand for stock is increasing, the market operates more like a supply chain, manufacturing stock for sale.


Or, when the supply of stock is contracting, the public sells stock to management teams, who buy with the intent of managing for profit.


It's so simple, a board or management team cannot be in a stock "for the long haul" if the amount of stock in public hands is to somehow rise!


If I'm selling a car, do I change the oil? No, I just wax it up. The shine-to-engine ratio must rise for the total amount of cars to rise.


eLROY