Importance of long-term holders?


Long-term holders play a vital role in both the stability and growth of financial markets and companies. Here are some of the key benefits:

  1. Stability and Predictability: Long-term holders provide a stable base of ownership, which contributes to lower volatility in stock prices. This stability is also attractive to potential investors who may be wary of more volatile stocks 1.

  2. Encouraging Strategic Decisions: Companies knowing they have committed long-term investors might focus on sustainable, strategic decisions rather than short-term gains. This can lead to healthier, more sustainable business practices 1.

  3. Mitigating Risk for Employees: Long-term holders often include employees holding company stock as part of their compensation. These holdings can motivate employees, aligning their interests with company performance and potentially leading to improved cooperation and productivity 1.

  4. Compounding Returns: Long-term investing, especially in high-quality companies committed to steady growth, can significantly compound returns over time, leading to substantial wealth accumulation 2.

In summary, long-term holders are crucial for promoting financial stability, encouraging sound business strategies, benefiting employee stakeholders, and fostering an environment where patient capital thrives, maximizing long-term returns.

Long Term Holders

Eric and Ben discuss the concept of long-term holders in the stock market and how compensation plays a role in employees' perception of future promotion opportunities. They also touch on the idea of using longer-term compensation instruments to provide employees with a better understanding of the company's value.


The Lean Startup and the Long-Term Stock Exchange (with Eric Ries)