A former blue chip stock you might want to avoid

Economy | Bill Newton

A former blue chip stock you might want to avoid

Associated Press/Photo by Mary Altaffer (file)

I once invested in a stock that was head and shoulders better than all its competition. It was clearly the best. The company’s foundational tenets were not perfect, but every attempt was made to thoughtfully and seriously incorporate biblical principles in all aspects of its operating procedures, people policies, rewards for employees, pricing of services, financial strategy, and relations with other companies. It started out small, but because of its solid foundation, it grew quickly.

Within a very short time, it was the envy of most every competitor. Those who did not envy it, tried with every fiber to displace it as the top performer. Success seemed to build upon success, and in good times and in bad, it found a way to prosper.

As the company matured, its leaders began to alter the founding principles—not by a lot at first—but in small increments. Associates at the company, customers, and suppliers hardly noticed. Not a lot changed. Its products continued to be solid, customers were satisfied, and suppliers continued to be paid on time. The company remained highly profitable.

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But altering founding principles was replaced with forgetting them, and some stakeholders began to notice. Product quality began to crumble. Some associates were mistreated, while others were paid for poor performance or no performance at all. Favoritism replaced competence. Company stock was issued to employees so generously that the original shareholders were soon diluted to a minority. Raises became routine, with no objective measure. Bills were paid late and discounted arbitrarily. The company borrowed heavily to fund the poor decisions being made by management. Profitability was forgotten and replaced with “fairness.”

By now the company was very large, and it threw its weight around like a bully when it served its interests. Because the company sold to so many, and was supplied by so many, it was difficult for patrons and merchants to find alternate outlets. Customers reluctantly began to look elsewhere, as did business partners. The erosion began slowly and was masked because the basic engine of the company was so powerful that it continued to perform in spite of its leaders. But that special “something” was missing.

Many stuck by the blue chip and assumed it could and would regain its former lofty status. “It had to,” they would say. The Bible was banned from the workplace, and pragmatism, favoritism, and corruption ruled. Spin and restated financials clouded the basic financial fragility of the once-formidable enterprise.

I have sold my stock and diversified into other companies, most of which can’t hold a candle to that company I bought years ago. But the demise of the stock is now inevitable unless someone rights the ship, and right now that seems unlikely.

For those who might want to avoid this stock its ticker symbol is “USA.”

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