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Stephanie Flanders on... the long-term

Updated Thursday 10th June 2010

Stephanie Flanders suggests that if companies want to think long term, they should persuade investors to look beyond the short-term 'bumps'.

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The business gurus always tell companies to think long-term, to take a strategic view.  When you talk to the heads of companies, they say that’s all very well, we’ve got investors and shareholders breathing down our necks looking for a quick return.  If you look at the financial markets, the massive swings in prices they do look very short-term.  But the economic theory says those ups and downs should be driven by reactions to long-term news.  For example, if you discover a big new source of gold, the price of gold might go up even if that gold isn’t going to come on-stream for ten years - that’s the theory.  Of course in practice there are a lot of traders in the markets trading on short-term news not that kind of long-term fundamental change, and that can cause some big ups and down in prices day-to-day.  If you’re a company wanting to think long-term, your job is to persuade your investors to look past those short-term bumps.

That’s my view. You can join the debate here on The Open University.

 

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