ABSTRACT
Delving into disciplines as varied as evolutionary neurology, technology, and trading psychology, this chapter examines the causes and manifestations of short-termism in capital markets. The results are a striking, if toxic, stew of irrational hyper-discounting of future cash flows, excess trading, and degradation of returns; all aided and abetted by Modern Portfolio Theory’s focus on relative returns and alpha-seeking, although not directly of Modern Portfolio Theory’s making.
