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bernardo

I believe the reason Wall Street pushes the short term is because CEO are focused on the short term. Most CEOs do not have a point of view that goes beyond the present. Most strategies are future/perfect tenses of the present. In addition, most CEOs are not selected for vision. They are selected for their EQ. EQ is the present not the future.

I would also add that the value of most companies has a good split between the present and future as measured by cash flows that are divide between 5 years and terminal value.

Finally, what evidence to we have that Wall Street is myopic in its evaluation of individual firms?

Thomas Tunstall

Just to elaborate a bit on the challenge of adopting a longer term view: Too many executives and boards fail to make consistent use of basic tools such as scenario planning that encompasses a wide variety of possible futures. Or game theory, which can help them better understand both customer and competitive responses to strategic initiatives. Yes, the future is uncertain, and we should guard against a false sense of precision about how events will play out. Nonetheless, as Pasteur said, "Chance favors the prepared mind." Senior leadership should do a better job ensuring that their minds are indeed prepared.

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