Wednesday, January 28, 2009

It takes money to make money

Growth requires investment. Obviously you can't just throw money around, but you can't conserve all of your resources or shareholders will punish your stock. If you aren't doing enough investment to produce growth, then shareholders will wonder why they should give you capital. This is true in the simulation: If you have too much cash, you will be punished. Thus, if you do well one period, you may have to invest rapidly the next.

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