Call for End to Short Term Investing

Discussion in 'Wall St. News' started by sophiekay, Sep 9, 2009.

  1. 28 Business Leaders Join Aspen Institute in Bold Call to Overcome Short-termism

    WASHINGTON, Sep. 09 /CSRwire/ - Twenty-eight leaders representing business, investment, government, academia, and labor joined the Aspen Institute Business & Society Program's Corporate Values Strategy Group (CVSG) to endorse a bold call to end the focus on value-destroying short-termism in our financial markets and create public policies that reward long-term value creation for investors and the public good.

    Among the signers are John Bogle, Warren Buffett, Barbara Hackman Franklin, Jack Ehnes, Louis Gerstner, Martin Lipton, Ira Millstein, John Olson, Peter Peterson, Felix Rohatyn, Charles Rossotti, Richard Trumka, John Whitehead, and James Wolfensohn.

    The statement, "Overcoming Short-termism: A Call for a More Responsible Approach to Investment and Business Management," identifies three leverage points for encouraging a renewed focus on long-term value creation and for addressing one part of market short-termism, shareholder short-termism:

    1. Market incentives: encourage more patient capital through tax policy
    2. Alignment: better align the interests of financial intermediaries and their ultimate investors
    3. Transparency: strengthen investor disclosures

    Ira Millstein commented that he joined this diverse group to help move discussion about reform beyond "pious wishful thinking, to the core issue in our market economy - how to incentivize capital to go long term." He adds, "The current system cannot achieve that result. The proposals presented in our statement are intended to place this issue front and center and to engender serious, realistic debate."
  2. TraDaToR


    What an asshole
  3. I read this closely and I think it is more of a call for to quell the short term gains compaines strive for with making these complex products and different ideas to make the money today instead of tomorrow. It also states that with respect to corporations, excutives and what not. Not so much having to do with short term individual investing or trading
  4. Here is part of statment and commentary below before people think Buffet or the Aspen Institute is talking about trading, they are not.

    The statement argues that a "healthy society requires healthy and responsible companies" working to achieve long-term goals.

    Instead, "boards, managers, shareholders with varying agendas, and regulators ... have allowed short-term considerations to overwhelm the desirable long-term growth and sustainable profit objectives of the corporation."

    The Aspen statement calls for boards, managers, and "most particularly, shareholders" ... institutional investors .. to shift their focus to long-term goals and not push for "high-leverage and high-risk corporate strategies designed to produce high short-term returns."
  5. BSAM


    Hmm.....I know these good and brainy folks couldn't have any self-interests involved here.
  6. On at least a weekly basis i`m talking with 3 gentlemen with a combined 120 years on Wall st. 2 are very well respected research analystswith published notes going back decades and one PM who trounces the $spx year after year with low volty. The conversation came up with all of them at lately about a "trader tax" and high freq trading. All of them told convincing stories of why they think the current trends in investing are destructive.

    After the first conversation I dismissed it as "the old guy cant hang with changing mkt conditions". After the second I nodded my head politely and thanked him for the valuable insight. After the third guy (and my best client) gave me his point of view I started to ponder their arguments.

    Not to get all long winded here, but the basic gist of it is they feel that the stock market is for creating capital to grow American business, and allow the positive benefits of trickle down economics to play out and not for capturing beta on a micro level by few players(relatively is a tiny community).

    Agree or disagree, I dont care. But i`m listening to both sides of the argument closely with an open mind.
  7. rsikit, if you download the full statement, the top of Page 4 states:

    "...implement an excise tax in ways that are designed to discourage excessive share trading and encourage longer term share ownership."

    This would be an additional tax on top of capital gains. See link to full statement document below. society program/overcome_short_state0909.pdf

  8. Course they do, but dont we all? :)
  9. So, you think it's OK for the government to dictate how you invest? What next? Will we receive a list of appropriate stocks to own as well? And who do we sue when we hold a stock for 3 years as it drops 90%?

  10. Your right Sohpiekay, I apologize, I read the article not the full document. Anyways, it was just on CNBC and it sounds like the guy , who is chairman of Exxon Moible compensation board, was talking about it. He I think was a part of this document, but its a very lofty goal. He was talkin about more corporate things, and didnt mention any excise tax. The prolonged captial gains tax would be a good idea. This guy wanted to do away with quarterly earnings reports and what not, wants to change the whole way things are done seems like.
    #10     Sep 9, 2009