'Stock' in Sharon at peak
His high 'share price' in global markets factors in disengagement
The share price of Israeli Prime Minister Ariel Sharon is trading high these days. But high share prices aren’t the great thumbs up, pat on the shoulder they seem to be.
Rather, they represent the high expectations of a long list of buyers - voters from the right, center and left, the Palestinians and the international community - that Sharon will deliver on his promises. Sharon’s high share price in the domestic and international market is nothing more than a letter of credit from a demanding public that will have to be paid up soon.
Anyone who has ever dabbled in trading shares knows that the price of a share today is all about future expectations. The market cares nothing about the past. Prices of shares in the present reflect our collective expectations about the future of companies - about their growth prospects, profitability and competition.
The truly depressing implication of this fact is that in effect, the future of the company and all its profits are mortgaged into eternity in exchange for the current price. This means that managers and employees, having promised the world that their company will grow and be profitable, are asking their shareholders to pay them now, for the hard work they expect to do in the future.
It may seem wonderful to be paid now. But it means that the hard work in the future will not be rewarded again. It was already rewarded once. So it will merely be taken for granted. Expect no more applause.
Hopelessley accelerating treadmill
So what should an applause-seeking CEO do? What can she do to further increase the share price, if all her good work is being taken for granted? Increase expectations once more.
Oh, but this provides only a moment’s respite. The market processes the new information and the increased expectations within nanoseconds. The share price goes up again, and the future is mortgaged once more.
It’s a hopelessly accelerating treadmill. The market knows no mercy. It gives immediate credit for future performance, but in return it makes the company subservient for delivering this performance. It punishes ruthlessly for any failure to perform, and above all, it is an insatiable beast that knows only one word: “more.”
Sharon, although one might not guess it from his appearance, is tied to this accelerating treadmill. The country’s mainstream voters, the Palestinians and the international community have already given him tremendous credit in return for his announcement of the disengagement plan. In announcing the plan and taking steps towards its implementation, he has raised expectations. In return, his share price shot up.
We should have no doubt. This high share price is not reward for past deeds. It is a letter for credit in return for promised future performance. The implementation of disengagement has already been mortgaged in return for present improvements in Israel’s international status, in its security situation vis-a-vis the Palestinians, and domestic political support.
Keep promises - or else
Should Sharon fail to make good on his promises all these benefits will disappear in a moment.
Disengagement can only be sold once. There is no more juice to be squeezed in terms of international benefits. Our share price is as high as it can get on this act alone. If Israel and Sharon want more - more from the international community, more from the Palestinians, we need to raise expectations once more.
In fact, whether Sharon likes it or not, his high share price may already reflect increased expectations beyond disengagement. The Americans, the Europeans, the Palestinians and many Israelis don’t expect things to end with disengagement. No one expects disengagement to be the end of the road. They expect it to be the beginning of the Roadmap.
A final word of caution: the accelerating treadmill is a nightmare, but being off it is worse. Mortgaging the future is burdensome, but not being able to borrow is painful. It is possible to get off the treadmill, but then it’s out completely.
No expectations are worse
When nothing is expected, zero credit is given. It’s hard to meet ever-rising expectations, but it’s worse to have nothing expected. We know - we’ve been there for the past four years.
The world, the center and left, and the Palestinians have given Sharon immense credit. His share price has never been higher. But this skyrocketing share price is nothing more than a mortgaging in advance of Israel’s commitment to perform on disengagement and to continue on to the Roadmap.
Anything less, and expect a crash.
