Better Capitalism; No To Quarterly Earnings Guidance?
In their WSJ opinion piece they're quoted with stating “In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth, and sustainability,” and “The financial markets have become too focused on the short term. Quarterly earnings-per-share guidance is a major driver of this trend and contributes to a shift away from long-term investments.”
While this may go against the normal rhetoric that is widely observed as short-term capitalistic greed, it is important that this is coming from two industry titans with a clear vision. It goes without being said that quarterly successes and failures do not by any means indicate the long-term performance of a company. This also endangers the flow of readily available capital for companies if investors are not willing to ride out the bumps in the road.
Thinking about the future inspires current generations as well as generations yet to come. Take Musk again for an example. Most all of his ventures from Zip2 all the way to Space X all revolve around the idea of creating value for the future. This vision he possesses takes imagination, ambition, and determination to not only explore his ideas, but to bring them into reality. If Musk was short sighted in his ventures, he would probably come off less crazy, but you need thinkers such as himself who are bold enough to stray away from the norms of business boundaries and willing to explore all sorts of different possibilities. No system in any realm is perfect, especially not an economic one. As time changes, so do cultural and societal values. That being said, there will need to be some changes to our economic system to make it sustainable in the long run while still meeting the necessities of today.