Accounting for the Future—will you be Wimpy or Warren Buffet?
“Someone’s sitting in the shade today because someone else planted a tree long time ago” – Warren Buffett
Last week I was reading a whitepaper from MFS Investment Management about the benefits of investing on a longer horizon.
Corporate citizenship leaders, take note. There is more and more being written about the need for investors to take a longer view. This perspective presents a potential opportunity for companies that are willing to make longer-term investments in environmental, social, and governance dimensions of their businesses to improve their operating environments so that they can sustain positive returns for the longer term.
The article points out that investors are increasingly short term in their orientation and stocks are being held for record-short periods of time (see figure below). Despite this trend, the article points out that company fundamentals do not change nearly as much as equity market prices, and herein lies the opportunity for investors with a longer-term orientation—and for the companies they invest in. The paper points out that many can ride the swings of the market for the short term, but it is over the long term that differentiated performance emerges—both for companies and for investors. So how can you help make sure your company’s plan for long-term value creation is promoted within the company and recognized beyond its walls?