Josh Brown, the Reformed Broker, has a brief and insightful post about the tension between two of the most important factions in finance, the macros versus the traders. As the financial cycles unfold, each gang has their own strategy to understand what’s happening and how to make money off of it – leading to lots of mockery for the opposing “team” :
On days the market is up, the traders loudly mock the macro guys: “But, but, but…Portugal!” they taunt, as they remove money from the marketplace thanks to the prowess of their trading that day. And then when the market is selling off viciously, you’ll see the macro people sneering in delight at the “momo monkeys” who are being roasted in techs and coals and cranes and commodities on the long side.
I resonated with this because it accurately describes the problem with our relationship to long-term and short-term thinking. Many people believe it is an either-or proposition: either you think about the long-term and the reality of our situation and able to make effective decisions or you are lost in the detail, failing to see the forest for the trees. Or, put another way: either you take of business, reacting dynamically to day-to-day realities, or you are day-dreaming about a long run which may never come. It all depends on your mindset which of these statements is most attractive.
And this is the root of our many predicaments today – both mindsets are valid, both are requires to lead society and its many institutions to a just and prosperous future. That said, it is a shame that on the balance, short-term thinking is more prized. Frankly, nobody ever got fired from an organization for thinking about the short-term, no matter how much we prattle on about “innovation” and “expecting the unexpected.” On the contrary, the vast majority of individuals currently warming the chairs reserved for leaders are much more likely to pat you on the head for vocally defending the status quo and the burning needs of the next ten minutes.
And this is why I predict continuous disruption in our institutions for some time to come. If you are interested in more, I wrote a whole book about this subject.