With global attention spans becoming ever shorter, the virtues of patience and long-term thinking are more relevant than ever for investors.
Recently I was at the Young Vic theatre, enjoying a great new staging of Arthur Miller’s play Death of a Salesman. Although it was gripping, there was some restlessness in the audience as the running time including interval was about three hours.
I wondered how they would cope with Hamlet, which with over 4,000 lines is Shakespeare’s longest play. Kenneth Branagh made a film version that bravely ran for 242 minutes, although most stagings now cut the play heavily. Zeffirelli’s film, for example, ran for 134 minutes. Hamlet is a prime example because of its length, but many other films and plays are heavily cut versions of longer works.
In Shakespeare’s time, of course, Hamlet would have been performed in full – taking over four hours. If Elizabethans had that much stamina, this is an indication that today’s attention spans have shortened.
To pay or not to pay attention
This phenomenon shows up in many areas of life. It tallies, for instance, with my experience of investment since I joined Phillips & Drew Fund Management in 1992. Much of my day then was spent in reading long research reports from investment analysts and scouring through companies’ annual report and accounts. When my colleagues discussed which stocks to invest in, they talked in terms of how the company might progress over a three to five-year time horizon.
Over the subsequent years, I believe the attention spans of analysts and investors have shortened progressively. Research notes are generally shorter. More insidiously, they often contain the same information repeated several times: perhaps analysts don’t expect clients to read it meticulously and so repeat themselves to ensure we will read the key points; perhaps they are padding it out due to a lack of time.
How important, how worrying, is the shortening of attention spans? To my mind, it is clear that in many ways it is a bad thing for society, not least in politics which seems now to be increasingly driven by soundbites and bluster rather than reasoned and thoughtful debate. Voters often decide by gut feeling.
Similarly in business, companies have meetings with investors where the questioning predominantly concerns the short term. Recently, I attended a group meeting with a major European manufacturer. The company has a sub-division with a strong position in an exciting growth market, but which has recently made a loss due to production delays at some of its partners. I was astonished to hear an analyst suggest to the company’s CFO that they should shut this area down to stem the losses. Fortunately this business is too strong an organisation to be influenced by these sorts of comments, but not all companies are.
Thinking makes it so
As a portfolio manager, I believe one of my key competitive advantages is to ignore the short-term noise and take a longer-time horizon than others. I make decisions based on the long-term fundamentals of a stock, looking to buy good prospects at an attractive price. Patience is a virtue in investment.
Hamlet isn’t my favourite play, and four hours is admittedly rather long. However, the world will be a poorer place if we don’t have the patience to wait seven years between episodes of Michael Apted’s documentary 7-Up, or the attention span to watch for two uninterrupted minutes as Omar Sharif approaches across the desert in Lawrence of Arabia.
We must be vigilant to maintain our attention spans and time horizon; we must be willing to ignore the clamour of the crowd.