I always walk away from a Commonwealth conference having learned something new—and it’s often not what I expected. This week, I learned how far-reaching the opioid crisis is. It turns out that two friends have family members who have been affected. It was a surprising revelation, as these are intelligent, successful people. But it drives home that this is a true epidemic, hitting people in all walks of life.
Often, what makes it on the news is the illicit drug use, the heroin overdoses. The legally prescribed narcotics are just as much of a problem. At the risk of being indelicate, I recently saw a TV ad for a new medicine designed to counteract opioid-induced constipation. Think about what this implies. These drugs are being prescribed so much, and people are taking them for a long enough time, that the pharmaceutical companies had to develop a new drug to mitigate the side effects. This problem is only going to get worse.
So far this year, I’m about 2 for 12 in flights actually leaving and arriving on time. Apart from recent headline-grabbing faux pas, the airlines simply are not doing their core job: providing reliable transportation. I’ve been traveling for a number of years, and I don’t think I’ve ever seen it this bad. While most of the attention is focused on smaller seats and abusive ticketing policies, I suspect there’s a lurking underinvestment eroding basic service quality. This, too, is likely to get worse. Now that the government is paying attention, the airlines may be in for a few rounds or reregulation if they don’t pay more attention to Business 101 issues like providing good customer service.
More and more, I am hearing from advisors that clients want to take more risk. In many cases, frustration over underperforming the S&P 500 is driving investors to put more money in stocks—and in riskier stocks—in pursuit of higher returns. This is always a bad sign for the markets, although it can lead to a short-term bump. I wasn’t hearing about this six months ago; it’s ramped up in the months since the election. It’s classic late-cycle behavior, and even as I remain optimistic about the markets in the short term, I am starting to get worried about the medium term.
Looking at these very different topics, they have one factor in common: in each case, the focus is on short-term benefits in lieu of long-term costs. Prescription drugs can alleviate pain in the short term, but we often don’t consider the long-term risks of use. The airlines' concern for short-term profits is overriding their consideration of service and reputation in the long term. And for investors, well, I’ve talked about the importance of keeping a long-term view many times before.
We live in a short-term world, but we have to remember that the decisions we make today can have a detrimental effect if we don’t also consider what they mean for the long term.