How short-term are the markets?

Corporations have plenty of reasons for short-termism – and financial markets are often too focused on the long term.

Economic trends are sometimes more closely related to one another than news reports make them seem. For example, one regularly encounters reports of governments’ financial troubles, like the ‘fiscal cliff’ in the United States and the debt crisis in Europe. And much attention has been devoted, often in nearby opinion pieces, to the view that hyper-active equities markets, particularly in the US and the United Kingdom, push large corporations to focus disproportionately on short-term financial results at the expense of long-term investments in their countries’ economies.

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