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Wall Street's 'Short-Termism' Has It on the Wrong Side of the Trade


Society has become more long-term oriented than it's been in decades. Wall Street must adapt or be left behind.

Editor's note: This article originally published on September 18, 2012.

MINYANVILLE ORIGINAL At a time when society is more long-term oriented than it's been in decades, Wall Street is destroying itself becoming more and more short-term oriented. It's a complete reversal from when society was profligate in the late 1960s while Wall Street was stodgy and conservative.

Maybe it sounds counterintuitive to say we're long-term oriented when hedge funds are hustling for basis points, retail investors are looking for the short-term security of bonds and dividend stocks, the stock market is putting more weight on the current quarter than ever, and we see headlines like Goldman Sachs (GS) ending two-year contracts for investment banking analysts.

But that's just finance. Step away and look at the larger picture. Environmental concern is at an all-time high. Personal health, whether we're talking about smoking, obesity, or nutrition, continues to grow in consumer and political importance. Both political parties are arguing for their plans to rein in long-term entitlement costs, the deficit, and the debt. Conservatives are concerned about the long-term stability of the dollar and energy security. Liberals are concerned about the environment, education, and investment in our infrastructure.

Millennials, so far known as the rental generation, have been reluctant to make long-term commitments to traditional societal institutions like marriage, houses, and corporate employment. Part of this is high unemployment and lack of financial resources, but the other part is they're still figuring out how their longer-term values fit, or don't, into existing institutions, and would rather invest their resources into things with long-term benefits, like education, health, and relationships, while they work these problems out.
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