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1. There are some that say that U.S. firms concentrate too much on short-term profits and...

1. There are some that say that U.S. firms concentrate too much on short-term profits and not enough on long-term profits. Do you agree? How does this conflict with the valuation of stock based on future cash flows.

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The firms are concentrating on only delivering short term results or profits due to the market expectations which expects the firm to do well just as long as they receive their dividends or the stock prices go up. The investors want the firm to deliver excellent results quarter on quarter leading the management to neglect the sustainability of profits and the business. The valuation of stock based on future cash flows is done with an assumption that the firm will make higher profits in the future than at the present. In this case where the firm focuses on short term profits ,it may not be able to estimate the long term profits accurately thereby bringing the stock value.

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