Note: The following was written on Nov., 2002

Is this about yin Feng Shui or another get-rich-quick scheme? No, but it could become your next get-poorer-quick fiasco.

Most of us know that ancient Egyptian Pharaohs had built huge pyramids and grand monuments to memorialize their reigns and feats at huge expenses to their people and treasury.

From watching History Channel episodes about the Pharaohs, we also learn that later Pharaohs, who were poorer but craving for the same glory, simply erased the names of earlier Pharaohs and put their names on the monuments.

It’s all about egos.

Modern Pharaohs do not build tombs but grandeur office buildings. They are the CEOs and executives of big corporations.

The followings are excerpts of a report from Star Tribune:
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Edifice wrecks: The link between shiny new HQs and falling stocks
Eric Wieffering, Star Tribune
Published Nov. 17, 2002

Some investors pore over earnings projections and other traditional yardsticks to determine whether it’s time to dump a stock. Others rely on complex charts or arcane models. Longtime amateur investor Graeme Thickins uses a more basic indicator: Does the company plan to move into or build a new headquarters?

Call it the edifice complex or the headquarters hex. There is an uncanny link between the unveiling of a glorious new facility and a nosedive in a company’s fortunes.
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In the Twin Cities, ADC Telecommunications is held up as the most glaring example. Business was booming when the communications equipment maker bought the land and began construction on a $100 million Eden Prairie campus. Since moving in 2001, however, the company has bid goodbye to half its revenue and more than half its employees. Its stock price has shriveled to under $2 from a 2000 peak of more than $40.
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The executive compulsion to memorialize their achievements in bricks and mortar is hardly new and has been seen nationwide. Chrysler had long since recovered from its early ’80s brush with death and was headed toward a new financial crisis in the early ’90s as the company moved into a new Michigan headquarters that was sometimes dubbed “Iacocca’s mausoleum.”

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Legendary Fidelity mutual fund manager Peter Lynch saw the problem enough that he liked to call it the potted plant syndrome, saying he’d learned to get nervous about a company when management moved into fancy offices with lots of greenery.

Ken Lai
http://www.kenlaifengshui.com
http://www.flickr.com/photos/10429370@N05/

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