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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 mana
by 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 agoThere'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 agoIt'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 agoWhat evidence do you have that investors are not irrational about the long term?