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I don’t think multiples are the issue. The question is: are companies set up to support a philology of long-term decision making? Talk to almost any middle mana

by eries 6y ago

I don’t think multiples are the issue. The question is: are companies set up to support a philology of long-term decision making? Talk to almost any middle manager in any public company in America if you are confused about whether this is the common case today

bobcostas55 6y ago
If investors are not irrational about the long term, then I don't see how there can be a problem. Prices will correctly reflect long-term expectations, and managers who are paid in options/hold equity will face the right set of incentives. If managers focus on the short term it's probably because it maximizes long-term value.
- eries 6y ago
  There's a lot of literature on this topic, and many empirical studies that call these assumptions into question. Just picking one at random from the set I've seen recently: https://www.ey.com/Publication/vwLUAssets/EY_Poland_Report/%24FILE/Short-termism_raport_EY.pdf https://www.ey.com/Publication/vwLUAssets/EY_Poland_Report/%...
  - deleted 6y ago
    [deleted]
- jxramos 6y ago
  It's kind of interesting to think about growth profiles over time. To grow over some long term span, like say 10 or 20 years, did the growth all take place in the last 90% of the interval or evenly throughout. I guess the premise of a company growing throughout all the short intervals across a long span of time is a good way to know at least something will be there down the road that's not too far off the mark from where you'd like to be with your investments. I'm trying to think of the reconciliation of short term vision with any wisdom contained therein with respect to long term gains.
- roguecoder 6y ago
  What evidence do you have that investors are not irrational about the long term?
JumpCrisscross 6y ago
> I don’t think multiples are the issue If multiples aren't higher, why would a company list on your exchange versus on the public market?
- eries 6y ago
  Companies care about many things other than mere multiples. And there are many factors that influence multiples. So I think it's accurate to say that companies consider many factors when deciding where and how to list.
  - vermilingua 6y ago
    Right, then, what are some of the factors that would make it preferable to list on the LTSE?

by eries 6y ago

bobcostas55 6y ago

If investors are not irrational about the long term, then I don't see how there can be a problem. Prices will correctly reflect long-term expectations, and managers who are paid in options/hold equity will face the right set of incentives. If managers focus on the short term it's probably because it maximizes long-term value.

eries 6y ago
There's a lot of literature on this topic, and many empirical studies that call these assumptions into question. Just picking one at random from the set I've seen recently: https://www.ey.com/Publication/vwLUAssets/EY_Poland_Report/%24FILE/Short-termism_raport_EY.pdf https://www.ey.com/Publication/vwLUAssets/EY_Poland_Report/%...
- deleted 6y ago
  [deleted]
jxramos 6y ago
It's kind of interesting to think about growth profiles over time. To grow over some long term span, like say 10 or 20 years, did the growth all take place in the last 90% of the interval or evenly throughout. I guess the premise of a company growing throughout all the short intervals across a long span of time is a good way to know at least something will be there down the road that's not too far off the mark from where you'd like to be with your investments. I'm trying to think of the reconciliation of short term vision with any wisdom contained therein with respect to long term gains.
roguecoder 6y ago
What evidence do you have that investors are not irrational about the long term?

JumpCrisscross 6y ago

> I don’t think multiples are the issue If multiples aren't higher, why would a company list on your exchange versus on the public market?

eries 6y ago
Companies care about many things other than mere multiples. And there are many factors that influence multiples. So I think it's accurate to say that companies consider many factors when deciding where and how to list.
- vermilingua 6y ago
  Right, then, what are some of the factors that would make it preferable to list on the LTSE?