Someone with a short-term vision focuses their efforts on immediate results, often at the expense of long-term value creation. Such behaviors are frequently seen in business; executives might, for example, be tempted to cut R&D spending to maximize short-term profits. Another example is companies buying back their shares to boost stock prices.
With Donald Trump’s arrival as President of the United States, I wonder if we’ve reached the peak of short-termism. For instance, aren’t potential punitive tariffs on Canadian and Mexican imports a clear example of measures that might have a positive short-term impact for American businesses but cause long-term damage to the U.S. economy?
In a recent blog (“Goodwill: hard to build, easy to destroy ”), I questioned how the U.S. can antagonize long-standing partners and allies like Canada. In its negotiations with Canada, the Trump administration might win concessions from its long-time partner, but at what long-term cost? Won’t an antagonistic stance against Canada and other historical allies destroy substantial long-term value?
Investing is the act of foregoing an immediate benefit or pleasure for a greater future reward. Mr. Charlie Munger often said that one of the greatest qualities of a good investor is the ability to “delay gratification.” This is the exact opposite of short-termism.
Despite what we see and hear these days, many people remain long-term investors, both in business and in investing—“Thank God!” as Americans would say.
Here are two recent examples that give me hope that reason and a long-term value creation mindset will withstand the obsession with the short term.
The first comes from Mr. Michel Atwood, CFO of Interparfums (“IPAR”), a stock held in some COTE 100 managed portfolios. In a recent investor and analyst call following the release of 2024 annual results, Mr. Atwood responded to an analyst who asked for quarterly revenue growth forecasts for 2025: “So on the top line, as you know, we don’t generally like to provide a quarterly guidance because we like to run our business for the next 10 years, not necessarily the next quarter.” I must admit, that’s an unusual and refreshing answer in the world of publicly traded companies.
The second example comes from the annual letter of Mr. Thomas S. Gayner, CEO of Markel Group (“MKL”), an American insurance company in which COTE 100 has been a shareholder for several years. In this letter, Mr. Gayner lists the company’s values that guide its leaders, including this one: “We’ve spent decades building enduring relationships with our long-term owners and aim to continue doing so. We believe that you, as shareholders, are our partners and not distant unnamed institutional entities on a statement.”
Incidentally, both companies are led by executives who own a significant portion of the shares. The two founders and main leaders of Interparfums own 43.8% of the company’s shares (as of July 2024). As for Markel’s executives, they collectively own 1.7% of the company’s shares (as of March 2024)—and if that seems small, note that this percentage represents nearly US$425M at the company’s recent market value.
As a long-term investor, I hope more investors, executives, and political leaders will adopt a long-term vision rather than a short-term one. Only this way can we create sustainable long-term value for society.
Philippe Le Blanc, CFA, MBA
Chief Investment Officer at COTE 100
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