A mysterious man holding an unpolished gold - this is about sundance resources. The man can live on holding it, showing how valuable this piece of gold, but does not actually polish it. He can live on this process by allocating a bit ownership of the gold to someone else each time, so the process can last a bit longer each time. He can do it quickly or slowly. He can also work really hard and effectively to polish the gold to reveal its true value.
The bottom line is that the fine details are secrects, and SHs will never know. The management is more or less a black box, even though regulations make it a little bit less balck. Because of this information asymetry, there is no market effect - no clear relationship between risk and reward to many CEOs. Economists have been questioning over years why a CEO deserves huge payout regardless of failing the compony. In a competitive market, this will never happen. One is paid for his so-called marginal productivity of labour - how much gained because of his work added or how much loss because of losing his work. (Many may have already known it, apology.) High return accompanies high risk.
Ultimately, it is a trust or faith on the management from an investor point view. Past failiure is a bad thing, but it does not always imply a current failiure. One can learn from the mistakes to make a significant improvement.
SDL Price at posting:
8.7¢ Sentiment: None Disclosure: Not Held
