Image Credit: Alex Nabaum
True or false: The stock market is too focused on the short term.
The answer seems almost too obvious. Companies often appear to care only about the next three to 12 months. On Wall Street, the long term begins about 30 seconds from now and generally ends a few weeks later, at most.
Believe it or not, companies and investors can sometimes be too focused on the long term. That counterintuitive risk is suddenly looming large, given the way giant technology companies are generating ever-higher returns and setting huge goals for growth into the distant future….
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This article was originally published on The Wall Street Journal.
Further reading
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
Michal Barzuza and Eric L. Talley, “Long-Term Bias”
James Mackintosh, “In the Long Run, Fear of Short-Termism is Mostly Bunk“
Data on long-term stock performance complied by Hendrik Bessembinder of Arizona State University