Caisse de Depot et Placement du Quebec
Created in 1965, CDPQ today manages more than $309.5 billion. We invest our clients funds worldwide, targeting high-quality assets rooted in the real economy.
Building a business-owner mind-set
By definition, long-term investors have a stake in the long-term health of the economy. Measured over years and decades, their performance is tied to the innovation, productivity, and growth of the companies in which they invest and, more broadly, to economic prosperity as it grows over time. These investors have good reason to focus on the business fundamentals of the companies and projects they invest in, on important policy choices, and on the broader fundamentals of the economy itself. In a word, long-term investors need to be builders.
Short-term investors have a different frame of mind. Fundamentally, they are traders. Their business depends on the hourly, weekly, or quarterly price swings of a stock, which can be completely disconnected from the underlying condition of companies or the state of the economy. Profit can be generated in good or bad times, based on the short-term movements of interchangeable stocks.
In today’s financial system, the problem is that too many—far too many—investors have become traders who treat companies like commodities. But companies are not commodities. They play critical roles in allocating resources, determining levels of investment, fostering innovation, creating jobs, and contributing to productivity and prosperity. When we treat companies as commodities— that is, when we trade them rather than invest in them—we run the risk of undermining the long-term growth prospects of our economy.
Why? Because as traders press for shortterm performance, CEOs have no choice but to focus their strategies on quarterly performance, to the detriment of long-term investment plans that might be costly in the near term but often enhance growth potential. Spread across the breadth of our economy, this dynamic contributes to the sort of slow growth we are experiencing globally today.
Many share this concern. In fact, the importance of investing with a long-term perspective is now much discussed, as the Focusing Capital on the Long Term1 initiative demonstrates. The beginnings of a consensus for change seem to be taking shape.
This being said, the truth is that long-term investing is difficult. Especially today, when information circles the planet in minutes, the pressure for short-term results has never been greater, and financial intermediaries have become omnipresent, increasing complexity, risk, and costs.
These are significant headwinds. To navigate such an environment successfully, long-term investors require independent governance, a renewed focus on culture and process, sound risk management, and, of course, the right people. Above all, they must return to the roots of asset ownership: investing in the real economy with a businessowner mind-set.
Address: Édifice Price 65, rue Sainte-Anne, 14th floor Québec, Québec G1R 3X5
Phone: +1 418 684-2334