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The Power of Long Term Thinking


Over the last several months in conversation with friends and acquaintances the subject of the recession and its affect on the stock market arose.  I was very interested to hear that so many people actually “bailed out” when the value of their portfolio dropped, hoping to “stem the bleeding”.  My approach, after talking with our advisor, was to ride out the storm … and ultimately things rebounded and we did OK.

That got me thinking about “short term” versus “long term” thinking, and how each has its place, but they can get you into trouble too.

I took a long term view with the investments and it paid off … those who took a short term approach probably suffered.  Incidentally the way the markets have been behaving today it looks like we are in for another rough ride … but I will remember the lessons from last time around.  My investments are in companies with good fundamentals, well financed and strong balance sheets … sure their market value will fluctuate as the markets fluctuate but at the end of the day they will still be around and healthy when the markets recover!

 There are many areas of our life affected by short and long term thinking.

Public companies are often driven to meet quarterly numbers … at the expense of long term strategies!  Does that make sense? 

We sometimes make career decisions based upon a few more dollars in the pocket today … versus a better long term career path.  Does THAT make sense?

We sometimes react in the heat of the moment (very-short term thinking) causing issues with friends, colleagues and family when taking a few minutes to catch our breaths might make us realize that this “incident” is really not worth the impact in the longer term picture of the relationship we are harming.

In business we can easily be driven by our environment … reacting to client and market needs and the every day pressures we face.  Yet, in order to be successful we need to plan, to take a longer term picture of our business, develop a vision for where we want to be and what we want our business to be in the future.  The long term thinking can then influence the daily decision making, ensuring that you “stay the course”.

Those are just a few examples … but invariably taking the time to develop a longer term view will give a much better pay back than the short term view.   So … hold onto those investments, as long as they are strong companies.  Do not get spooked by all the “short term” thinking that makes the news … “the markets are tanking”, “the Dow is down at record lows” etc. etc. 

Now if only those US and European politicians causing all these problems could learn to think long term, instead of the next election, life would be good!