The Case for Long-Termism

Abstract

In their 2014 article in Harvard Business Review, Dominic Barton and Mark Wiseman write that “big investors have an obligation to end the plague of short-termism.” This article supports their assertion by showing that, logically, real investing (as opposed to trading) is inherently wealth creating and long-term in nature. However, powerful short-term forces stand in the way of this kind of investing. The article provides evidence that when these short-term forces are neutralized, executing long-term investment strategies that generate positive multi-decade excess returns becomes a realistic possibility.

Keywords: Abductive Reasoning, Agency Theory, Asymmetric Information, Behavioral Finance, Fiduciary Duties, Investment Beliefs, Long-Term Investing, Pension Fund