Exploiting Myopia: The Returns to Long Term Investing

Kalash Jain, Dian Jiao

Research

56 Pages

The authors argue investment managers face short horizon incentives that can create predictable mispricing in stocks requiring patience. They link shorter horizons to higher subsequent returns, especially where temporary underperformance is hard to tolerate. The paper uses a 2004 disclosure rule change as evidence that more frequent scrutiny can worsen myopia.

Date published: September 10, 2025

Key Takeaways

Horizon driven mispricing: Short term pressure can push investors away from long payback opportunities.
Disclosure effects: More frequent reporting is framed as reducing long term ownership in affected firms.
Constraints not insight: Results are attributed to holding constraints, not superior information processing.
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