This short-term thinking will lead to huge long-term damage

A culture of short-termism among publicly-traded companies in the US is stifling investment. That will cause long-term damage to America's economy.

A full page article in the FT a few days ago claimed that "experts are struggling to explain a great puzzle of the US economy." It went on to note that since the late 1980s, new investment in the US has all but stalled. Corporate profits are at record highs, but big companies just aren't investing the money in the kind of things that will bring them future streams of profits.

To some this seems, as the article says, "profoundly odd". High profits suggest that it is easy to make money, while low interest rates mean that capital is "dirt cheap". All economic logic suggests that companies should be borrowing and investing as fast as they can. Instead, they are sitting on cash, and if they are borrowing, they are often doing it to finance stock buybacks, one of the most value destroying pieces of idiocy Wall Street has yet come up with (see my previous columns on this).

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.