Sustainable Investing and the Financial Crisis – Joe Keefe, President and CEO Pax World

How long-term investing can replace short-term bubbles

Speculative bubbles, before they inevitably burst, are fundamentally the triumph of short-term thinking over long-term thinking, and of short-term investors over long-term investors.

The Financial Crisis of 2008 may be unique and unprecedented but it shares elements in common with previous market upheavals, such as the crisis of 1997-1998 or the bursting of the Internet bubble in 2001. In each instance, speculative bubbles fueled by greed, leverage and short-term thinking ended up wreaking havoc on markets and the underlying economy when they eventually burst. Corporations—in the current crisis, our largest financial institutions—are transformed into vehicles whose primary purpose becomes making a small group of management insiders (or select clients) enormously rich over very short periods of time...

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