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SHARK REPELLENTS AND
RESEARCH AND DEVELOPMENT:
DOES MANAGEMENT HAVE A
LONG-RUN PERSPECTIVE?
One of the most difficult challenges faced by tech stock investors is the need to
ensure that management maintains an appropriate long-term perspective. In a
well-functioning high-tech environment, management pursues those investment
projects that promise stockholders the largest payoff when dollars are measured
in risk-adjusted net present-value terms. At times, the most meritorious high-tech
investment projects involve chancy research and development (R&D) investments
that take months, if not years, to bring to fruition. R&D is, at best, a risky bet that