Financial analysts and investors use a large variety of metrics to evaluate the attractiveness of investments in the stock market. Many characteristics -- including valuation metrics, financial performance and balance sheet soundness -- are used to evaluate the prospects of equity securities. Yet, there is -- in my opinion -- a particularly important aspect of a company that is generally overlooked when evaluating the long-term attractiveness of its stock. This under-researched area of corporate quality is the culture of the firm. Corporate cultures have tended to become rather short-term oriented, which is blamed by some on the process they call "financialization." "Shortermism" (or #shortermism as I discuss in this book) is the core problem, and financialization rather a symptom of it. A commitment to more of a long-term focus is already bearing substantial fruits at some of the most successful companies in the US. I believe that companies with strong cultures focused on long-term performance will increasingly be rewarded with higher valuations in the stock market. Some early praise for Against #shortermism... "Claudio has disrupted himself more than once in his successful career. By taking the right risks, capitalizing on his distinctive strengths and being discovery-driven, in particular, he became one of the leading investors in the emerging markets of Latin America. In observing Claudio interact with the C-suite, I had deep admiration, around his ability to drill down into the under-researched area of corporate culture. If you are serious about the long-term, Brocado's Against #shortermism is a must read." -- Whitney Johnson, author, critically-acclaimed Disrupt Yourself: Putting the Power of Disruptive Innovation to Work, former Institutional Investor-ranked equity analyst. When Claudio worked with me at El Torito, I encouraged him to follow his dream. Even back then, he was fascinated with the issue of corporate culture (and how it interacted with the long-term performance of stocks). Claudio moved on to the field of equity research. His success there was largely due to his keen attention to corporate culture. Financial analysts more often than not neglect questions that are harder to quantify (such as so-called 'soft' issues, like corporate culture). Claudio is a very honest, personable, intelligent fellow. His grasp of the unique Starbucks culture (where he never worked, but as praised in his book) is both accurate and insightful. As for a first hand account, the importance of corporate culture at Starbucks has been consistently front and center from the day I started in 1995 to the present. This has clearly been reflected in both the company's outstanding results and the long-term performance of its stock. -- Michael Casey, Former CFO, Starbucks Corp.; Former President and CEO, El Torito Restaurants, Inc.
About the Author: Claudio Brocado studied at Washington State University, where he graduated Summa Cum Laude with a double major in Business Administration and Foreign Languages and Literatures. He later obtained his MBA from the University of California, Irvine. Following a successful eight-year career in the restaurant industry, with most of it in financial planning and analysis, Claudio entered the financial services industry. He had a rewarding long career as an emerging markets equity portfolio manager. To spend more time with his family -- his, wife and daughter, as well as his son and his young family (including a beautiful granddaughter) -- Claudio retired from full-time corporate work. Thus, after managing Latin American and emerging market equity funds at Putnam, Fidelity and Legg Mason's Batterymarch in Boston, Claudio is managing his own small global fund. To stay sharp as an investor, Claudio reads and studies extensively, and publishes his thoughts on LinkedIn and Seeking Alpha. On why Claudio became involved with YIS... When YIS founder and president James Fletcher described to Claudio his vision for what was to become Young Investors Society, he immediately bought into the dream. YIS represents a great cause, which prompted Claudio to a certain extent to interrupt his own version of retirement. The younger generation is (to Claudio, somewhat surprisingly) generally not interested in the stock market at all. Given that equities have long been his passion, he wanted to do whatever he could to push in the opposite direction. He believes today's youth may be missing out on the greatest way to safeguard their own happy retirement. He continues to believe there is no better way to conservatively build great wealth over the long term than the stock market. Nevertheless, 'Wall Street' and anything related to it seem to be so discredited that today's youth is not inspired to get involved in stocks. Part of the financial industry's bad reputation is due to a general short-term orientation in the corporate culture of Wall Street firms. Through YIS, we can contribute to the education of a new generation of investors who will focus on the long run. YIS will hopefully succeed in attracting many bright, caring young people to financial services well into the future. But even if it does not, our non-profit organization can teach high school students to become better investors in themselves and in their communities, thus contributing to a better future for all.