Stock Markets and the Middle Class

Stock markets around the world do a phenomenal job of facilitating the financial investments that large companies need to grow. However, the quarterly reporting requirements frequently force corporate leaders to focus on short-term profits at the expense of long-term growth and profitability.

This “Short-Termism” is not good for the company or investors in the long-run. Quarterly reporting forces companies to reduce the quality and quantity of goods provided to average citizens. Companies frequently attempt to increase costs or reduce expenses to improve profitability every three months. This leads to the regular increases in costs of products and services that significantly impact the ability of average households to pay their monthly bills. Grocery store price increases are probably the most visible example of the focus of companies on short-term profit maximization.

The resulting price increases reduces the real value of current household income and pushes many households out of the middle class. The Middle Class Movement believes that if we show the world the long-term negative impact on average citizens and shareholders of a public company focus on quarterly profits we will be able to expand the growing movement to influence public corporations to focus on long-term profitability instead of short-termism.

Alfred Rappaport, in his book Saving Capitalism from Short-Termism: How to build Long-Term Value and Take Back Our Financial Future, indicates that it is essential that corporations focus on long-term investing to maximize shareholder value. The Middle Class Movement is attempting to convince the world that this approach to the capital markets is good for both shareholders and society.

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