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Corporate Short-Termism

Sigma Investment Counselors

August 11, 2015

Short-termism refers to an excessive focus on short-term results at the expense of the long term.

Numerous politicians, on both sides of the aisle, and most recently Hillary Clinton, have sought to blame the weak economic recovery over the last several years, on the perception that corporate America is consumed with an effort to maximize short-term results.  This contention has looked to relatively slow capital spending, increased share buybacks and higher dividends as evidence of short-termism. 

Perhaps, but consider the following:

Successful investing is not based on short-termism, unless you are a hedge fund.  Most investors, with a long term perspective, seek to find companies with the potential to provide consistent, above average growth combined with the potential for an increasing and predictable dividend.

Bottom line, economic growth of less than 2% isn’t working for anyone.  Political class, please note.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®

 

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