"profitable failure" theory

After seeing several major failures from companies (LL) that should know better, it led me to a theory. I'll call it the "profitable failure" theory. If the company is publicly traded on the stock market its easier to visualize the effects.

1) Neglect and mismanage your company until its stock price drops significantly.
2) Get your 'friends' to invest in the bargain stocks.
3) Manage your company well until the stock price rises again, then tell your 'friends' to sell.
4) Ask your 'friends' for 'favors' then repeat step 1

It never fully dawned on me that intentional failures, followed by a recovery, might be more profitable than steady, mild success. I doubt that this theory is new but googling "profitable failure" returned little. Is there a better name for it?

Yes, insider trading is illegal, but how do they know if you did? I'm hoping there's some better reason this theory can't possibly be true, specificly in Linden Labs case. To reward cyclical intentional failure then success would be a messed up way for any society to work.

It would be more profitable to simply manage your company well and try to keep the share price high.

Look for "insider trading" - but this kind of thing really wouldn't work out so well with a privately held company.

I used to work with the guy who was the first ever to be done for insider trading in the USA. After a few years he went and did it again - and got caught again!

Pep (Maybe you should ask him how they know)

aren't privately owned companies just that? privately owned?
i mean once people sell stocks off to outside investors you are not really privately owned anymore.
you now have outside investors.

That's still on the privately held side of things, the stock isn't out on the market for the public to trade. So, there really isn't a market price there to manipulate.

I thought this thread was going to be about not ending up where you intended, but still being profitable. LL might fit that description.

Malicious mismanagement? I doubt it.

AFAIK, nobody is making or losing any money on equity they may have in Linden Research Inc., because there's no way to sell it.*

On the other hand, totally ruining the in-world land market in one direction, waiting a few months, and ruining it in the opposite direction could be enormously profitable for somebody who knew which way the wind is blowing. Given the track record, one can be pretty sure that the wind will always blow in the opposite direction of the last gale, so it doesn't really require insider knowledge, just good timing.

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*Or so I assume. One wonders what happened to any share Cory may have had, for example. There's a current thread from bizarro world that somehow vaguely associates the recent OpenSpace fiasco with Cory's departure; I suppose one could weave an elaborate conspiracy theory--if one didn't have full faith in Cory's utter indifference about all things SL at this point.