Now more than ever it is important that we stay true to our long-term perspective. As uncertainty plays havoc with the stock market and the global economy edges toward recession, our exceptionally long investment horizon shapes how we view opportunities and risks.
Recently Mark Machin, CPP Investments’ President and CEO, joined more than 130 global executives from leading corporations, asset managers and institutional investors at FCLT Summit 2020, where he gave the keynote address. Hosted by FCLTGlobal, the non-profit we co-founded in 2016 to develop research and tools that encourage long-term investing, it was an opportunity to explore current issues surrounding long-term growth of global capital markets.
Speaking against the backdrop of the growing global pandemic, Machin balanced pressing short-term concerns with the benefits of long-term vision: “There’s no better time than now to force ourselves to maintain that long-term perspective for what we are all trying to achieve. Our minds are wired to fear and prioritize only the short-term threats and we need to escape this trap.”
Still, global companies are falling short on long-term behaviors and paying a price for it. Companies are scoring lower than they did in 2014, and well below the level reached before the financial crisis of 2008, on their overall measure of long-term behavior.
If companies were more long-term, the research suggests they could earn an additional US$1.5 trillion per year in returns on invested capital. In the United States alone, FCLTGlobal found that short-termism may have cost 5 million jobs, $1 trillion in asset wealth and about 1 percent of GDP growth in 2001 – 2015.
We came away from the Summit clear and confident that our long-term approach toward investing is the best way to help ensure that Canadian’s pensions will be safe and secure when they are ready to retire.
You can read a summary of FCLT Summit 2020 here.
CPP Investments President and CEO, Mark Machin was named chair of the board of directors of FCLTGlobal in January 2020. FCLTGlobal is a non-profit organization that develops research and tools to encourage long-term investing.