“I Need Cash Now!”

The article “Overcoming Short-Termism” discuss some good ideas that could help increase the length of investment made by investors and companies.  It seemed to attack the newly acceptable life style that millions of people have been living for years.  Instant gratification has become the over whelming idea in every aspect of people’s lives all over the world.  People want things now, instant entertainment, instant information, instant transportation, and now instant result of investments made.  Are we too far adapt to this instant gratification to start moving in the opposite direction?  Would companies be willing to give up short-term investments that give them cash now for a long-term investment that increase the length of the pay off?  It would appear that investors and companies want to be able to make a large amount of money instantly with short-term investments and to compound the problem there are companies offering very tempting short-term investments because they need money right now.  Would it be safe to say that there are very few alternatives to short-term investments?

Are regulations and incentives a good enough alternative to change an entire mind-set?  Companies that have operated under this investment method will have to change their entire business model and business activities to adjust to the new long-term investment mentality.  Like in most instances there will be companies that are willing to pay extra taxes to be able to still operate with short-term investments.  Do investors really have an opportunity to make money over the long run with long-term investments or does that put them behind the competitive edge?

The problem with short-termism stems much farther than just people making short-term investments in an unpredictable market.  It comes from a mentality that has been accepted by a majority of the population of the world.  This mentality and business practice will take an extremely long time to reverse, and in the end will it be better for companies to be forced to make long-term investments?

For those of you who enjoy the commercials….

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5 Responses to “I Need Cash Now!”

  1. MDHarbin says:

    Have you seen the human planet tree root bridges (see link below)? The villages build these bridges for hundreds of years (each one takes generations to construct) to cope with the flood season of their environment. Sure, its not the society that you and I see but at least there is hope for overcoming short-termism. Future generations will eventually look back and see our current society for its immaturity and ignorance, but with each boom and bust cycle there’s hope for change.


  2. mmilne23 says:

    I agree that the idea of short termism is very appealing to companies and individuals who want cash now. Instant gratification is something that most strive for. Why wait? It would be interesting to see how companies are operating now in our current market climate though. With an equity market that is extremely volatile you see more and more people taking their money out of the stock market and putting it into long term investments such as bonds and treasuries. Even these though are becoming less and less reliable due to the global debt crisis. So it would be interesting to see what unusual alternatives individuals are turning to to balance out long term and short investments since both right now seem to riskier than ever.

  3. jwhite17 says:

    I don’t think that the solution for short-termism is a quick one. I believe that the movement has to start at the educational level (undergrad and business school), and be bolstered by the business press. There is a lot of empirical evidence to show that companies with long-term business plans outperform their peers over the long haul, but conservative growth isn’t interesting, and doesn’t sell magazines. Only after the business world has a change in perspective can they change their operations.

  4. meghancrawford says:

    Yes, it is fair to say there are little alternatives to short term investment when our society today is constantly changing and focused more on what is in front of us now, rather than what is in store for the future. I feel it will be hard to change an entire mindset but it is possible. The management team of a company is crucial to initiating change in order to see long term decisions. Although change will not happen overnight, with the right management teams change should occur and in the long term companies along with stockholders will benefit. If the management team is able to see what is best for their company, they will be willing to take one step back, in order to take two steps forward.

  5. mnickels says:

    I also believe that the solution for short-termism is not a quick and speedy one. I think one thing that can help businesses change this is by looking at past failures and realize that some of the main reasons the company failed is that it was making short-term decisions. It is very appealing to make a decision or investment that will reap benefits in the short term, but the long term effects must also be taken into account if the venture is going to succeed overall. I agree with Jason in that the business world must have a change in perspective before they can change their operations; I think that might be one of the only ways short-termism can become less of a problem.

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