Investor sentiment is accurately reflected in the stock price. If investors were incorrectly letting short term thinking dominate their buy/sell activity, then a long term investor should be able to make higher-than-market investment returns by betting against those incorrect short term thinkers.
I don't see this happening, hence I don't buy the idea that investor sentiment is incorrectly biased towards short term thinking.
Consider Amazon again - its stock zoomed for many years after its IPO and despite losing vast sums every quarter and many predictions that it would never climb out of those losses. Obviously, investors were pricing the stock based on a very long term outlook (and were amply rewarded for their prescience).
> I see stock moves all the time based on the prospects for distant future earnings - Amazon is a prime example. So is any stock with a high P/E.
and this statement can also still be true:
>And for the average investor, next quarter's earnings are much more important than earnings in 2015.