BlackRock's Larry Fink calls for more long-term thinking
Investment fund has $4.4 trillion under management including pension funds
With $4.4 trillion in assets under management, BlackRock Investment Fund wields enormous influence in the U.S. and around the world.
Its chairman and CEO Larry Fink has advised government leaders in the U.S., Sweden and Germany and business leaders in companies such as General Electric and JPMorgan Chase.
About 62 per cent of the millions under management are worker pension plans, making him the custodian of retirement security for millions of Americans.
Fink says he has to think long-term and that’s a message he’s passed to CEOs around the world.
“I think the problem today is short-termism is so overwhelming that you see confusion in politics — it appears that governments have a hard time moving forward working on long-term policies to empower and improve a country,” he said in an interview with CBC’s Lang & O’Leary Exchange that will be aired Thursday.
Focus on long-term productivity of company
Short-term strategies demanded by activist shareholders, including share repurchases and big dividends, have grabbed too much public attention, Fink said.
The focus on raising share prices in the short term can hurt the longer-term health and productivity of the company, he said.
“There are many instances we can think of in which the money would have been better put into investing in people, investing in plants and equipment,” Fink said.
My view of where you should put money, I think North America, including Canada, including the U.S. — I’m very bullish on Mexico — is a great place for long-term investors- BlackRock's Larry Fink
Pension fund investors have to think long-term, because they’re looking at the outcomes 30 years down the road, when workers are ready to retire, he said.
That means thinking about social good, including where jobs will come from in future. While some companies are showing great leadership in these areas, others have succumbed to short-term thinking, Fink said.
The same is true in the public sector, he said.
Likes infrastructure spending
"If we don’t see leaders of the free world focusing on long-term solutions, it’s very difficult for capitalists to do that singularly and who’s losing out – the vast majority of people," he said.
Fink predicts big productivity gains are coming in nearly every sector – from technology to agriculture to manufacturing.
That’s one of the reasons he’s an advocate for infrastructure spending.
“One of my greatest frustrations [with Washington] is we’re not seeing robust involvement of the public sector, working with the private sector to build infrastructure projects,” he said.
“Over 50 per cent of job creation and more is from small and medium business and 50 per cent of all small and medium businesses is in some form of construction...I can’t think of another industry that would help so many people get employment again,” he added.
Where to invest
Fink said he believes investors will come out ahead by putting their money into North American markets – including Canada and Mexico.
He says the U.S. has moved faster than the EU to fix the problems with its banks, and has great potential for growth because of a technology boom that will power its economy over the next few years.
“We have created energy technology... that has created a whole new dynamic to the U.S. This is where we don’t get enough credit. It’s the entrepreneurialism of the U.S., whether the entrepreneurialism of Facebook, of Google,” Fink said.
U.S. stocks have high prices, he agreed, but there is still great potential.
“My view of where you should put money, I think North America, including Canada, including the U.S. — I’m very bullish on Mexico — is a great place for long-term investors.”