Investor Growth Quotes

When we invest, It’s about the big picture, and having a holistic approach to investing

Obvious prospects for physical growth in a business do not translate into obvious profits for investors.

Every tree in every forest is participating in investment activities….. capital allocation, energy flow, resourcefulness, utilization, leverage, information distribution, growth, value creation, and ROI…. Nature is an economy, and every tree is an investor in that economy. Sometimes I just sit in my back yard, observe, and take notes.

Investing is a special thing. In terms of functionality, almost anyone can invest. But in terms of achieving the results of long-term profit and sustainable growth, only some people have the talent or skill sets for that. It’s like baseball for example… anyone can swing a bat at a ball. But only a few people make it to the big league, and even fewer become world champs. These days there are so many apps and platforms for individual investing, but that doesn’t mean everyone is achieving good results or ROI. There are great investors, good investors, and bad investors. A professional investor can achieve exponential growth and profit. A professional investor understands markets and industries and can account for both the traditional and the new.

Investing is a special thing. In terms of functionality, almost anyone invest. But in terms of achieving the results of long-term profit and sustainable growth, only some people have the talent or skill sets for that. It’s like baseball for example… anyone can swing a bat at a ball. But only a few guys make it to the big league, and even fewer become world champs. These days there are so many apps and platforms for individual investing, but that doesn’t mean everyone is achieving the same results. There are great investors, good investors, and bad investors. A professional investor can achieve exponential growth and profit. A professional investor understands markets and industries and can account for both the traditional and the new.

Here is an all-too-brief summary of Buffett’s approach: He looks for what he calls “franchise” companies with strong consumer brands, easily understandable businesses, robust financial health, and near-monopolies in their markets, like H & R Block, Gillette, and the Washington Post Co. Buffett likes to snap up a stock when a scandal, big loss, or other bad news passes over it like a storm cloud—as when he bought Coca-Cola soon after its disastrous rollout of “New Coke” and the market crash of 1987. He also wants to see managers who set and meet realistic goals; build their businesses from within rather than through acquisition; allocate capital wisely; and do not pay themselves hundred-million-dollar jackpots of stock options. Buffett insists on steady and sustainable growth in earnings, so the company will be worth more in the future than it is today.

Being net value adders puts us better positioned for long-term growth and longevity – because in the long term, capital flows to net value adders.

Anybody can throw a basketball toward a hoop. But only a relative few can exercise the athletic prowess of dribbling down the court, account for and surpass a variety of obstacles, and actually get the ball into the hoop consistently and repetitively contributing toward an ultimate win for the team. In the same way, anyone can open an investment account with M1 or Acorns or Robinhood or Cashapp… or even with the big guys like Ameritrade or Fidelity or Charles Schwabb or Morgan Stanley… but only a relative few can navigate an ever-changing economic paradigm, overcome various financial, legal and social obstacles, maintaining alignment with values, and achieve substantial growth and profits - contributing toward an ultimate win for the team. It’s better to hire a professional investor if you expect professional results.

A company could use bricks to measure their growth rate. How many bricks have angry investors thrown at you lately? If the answer is none, then your growth rate is probably pretty good… for the moment.

Permaculture Investing™ is an investment strategy based on achieving the goals of (a) long-term Return on Investment, (b) consistent income and (c) resilient growth for investors, by combining Permaculture philosophy with various traditional approaches to investing.

Strategic tax management also enhances a company's competitiveness by enabling them to make informed financial decisions, attract investors, and adapt to changing tax regulations. It helps in minimizing financial risk and ensuring that the company's financial health remains strong, fostering long-term sustainability and growth.

if we should put the least priority on profit and sales growth numbers then what will be our priority? The answer is Return on Equity (ROE).

I dream of a world where we are all financially literate, financially free and we are all investors

Ensure that value is created for all stakeholders – customers, employees, partners, society, and investors – simultaneously

It's not that Twitter isn't successful, it just isn't successful enough to justify all the money investors have pumped into it.

Do not trust historical data—especially recent data—to estimate the future returns of stocks and bonds. Instead, rely on interest and dividend payouts and their growth/failure rates.

We basically used oil and aquifer water to temporarily boost the carrying capacity of the land, all for economic growth demanded by Wall Street investors. It’s a crazy system that only makes sense when you foist all the costs onto taxpayers in the form of crop subsidies that benefit agribusiness, and defense spending to secure fossil fuels. We’re basically paying for corporations to seize control of the food supply and dictate to us the terms under which we live.

Many security analysts still believe that agencies are a poor investment. Not so Warren Buffett, one of the most successful investors in the world. He has taken substantial positions in three publicly held agencies, and is quoted as saying, ‘The best business is a royalty on the growth of others, requiring very little capital itself … such as the top international advertising agencies.’ If

Every business, theoretically is a lifestyle business, in that each represents your choice of how you want to live. If you want to work in the fast-paced corporate world, you have to accept that your life will have little room for something else. If you choose the growth-focused venture capital world, you have to accept being beholden to two groups of people: investors and customers (and what each wants could be vastly different). And if you work in a company where enough profit is acceptable, then your lifestyle can be optimized for more than just growing profit.

Malls in the late forties and early fifties were risky. Suburban customers still believed in making major purchases in the central business districts of cities and towns, where they expected to find the greatest selection of merchandise and the most competitive prices. After the tax laws of 1954, this changed. Shopping mall developers were among the biggest beneficiaries of accelerated depreciation, and they most often located projects where the older strips met the new interchanges of major projects. With the new tax write-offs, over 98 percent of malls made money for their investors.

WHAT DOES IT ALL MEAN? The lessons of market history are clear. Styles and fashions in investors’ evaluations of securities can and often do play a critical role in the pricing of securities. The stock market at times conforms well to the castle-in-the-air theory. For this reason, the game of investing can be extremely dangerous. Another lesson that cries out for attention is that investors should be very wary of purchasing today’s hot “new issue.” Most initial public offerings underperform the stock market as a whole. And if you buy the new issue after it begins trading, usually at a higher price, you are even more certain to lose. Investors would be well advised to treat new issues with a healthy dose of skepticism. Certainly investors in the past have built many castles in the air with IPOs. Remember that the major sellers of the stock of IPOs are the managers of the companies themselves. They try to time their sales to coincide with a peak in the prosperity of their companies or with the height of investor enthusiasm for some current fad. In such cases, the urge to get on the bandwagon—even in high-growth industries—produced a profitless prosperity for investors.

The real nemesis of the modern economy is ecological collapse. Both scientific progress and economic growth take place within a brittle biosphere, and as they gather steam, so the shock waves destabilise the ecology. In order to provide every person in the world with the same standard of living as affluent Americans, we would need a few more planets – but we only have this one. If progress and growth do end up destroying the ecosystem, the cost will be dear not merely to vampires, foxes and rabbits, but also to Sapiens. An ecological meltdown will cause economic ruin, political turmoil, a fall in human standards of living, and it might threaten the very existence of human civilisation. We could lessen the danger by slowing down the pace of progress and growth. If this year investors expect to get a 6 per cent return on their portfolios, in ten years they will be satisfied with a 3 per cent return, in twenty years only 1 per cent, and in thirty years the economy will stop growing and we’ll be happy with what we’ve already got. Yet the creed of growth firmly objects to such a heretical idea. Instead, it suggests we should run even faster. If our discoveries destabilise the ecosystem and threaten humanity, then we should discover something to protect ourselves. If the ozone layer dwindles and exposes us to skin cancer, we should invent better sunscreen and better cancer treatments, thereby also promoting the growth of new sunscreen factories and cancer centres. If all the new industries pollute the atmosphere and the oceans, causing global warming and mass extinctions, then we should build for ourselves virtual worlds and hi-tech sanctuaries that will provide us with all the good things in life even if the planet is as hot, dreary and polluted as hell.

I interpret your question as applying more to financial stability in the euro area than to the euro itself. I do not think there has been a crisis. The euro is the single currency of 330 million people and enjoys a high degree of confidence among investors and savers because it has delivered price stability remarkably well over the last 11½ years. What we had was a situation in which a number of countries had not respected the Stability and Growth Pact. These countries have now engaged in policies of fiscal retrenchment that were overdue. They have to implement vigorously these policies which are decisive for the preservation and consolidation of financial stability in Europe.

Many aspects of how the Chinese political class manages its economy are antithetical to the Western values of democracy and free markets. But this stance has not put off foreign investors, who are attracted to the government’s willingness to prioritize physical infrastructure, political security, and stability over the health of the population, transparency in decision making, and transparency in the rule of law (if not necessarily the system of governance). In essence, the pursuit of economic growth overrides any views on the political system they invest in. Currently China’s political class has a strategy to evolve from an investment-led exporting economy to one more in line with Western economies, relying on domestic consumption. The transition to this new economic equilibrium will not be linear. China will likely experience significant economic volatility and market gyrations as the structure of its economy shifts. There is also mounting skepticism about China’s ability to manage its debt levels, and the country’s lack of individual political freedoms will continue to hamper its growth prospects. But Chinese policymakers will, no doubt, be focused on continuing to show economic progress in advance of two target dates: 2021—one hundred years after the formation of the Communist Party—and 2049, one hundred years after the formation of the People’s Republic of China.

In country after country where local moneys were abolished in favor of interest-bearing central currency, people fell into poverty, health declined, and society deteriorated12 by all measures. Even the plague can be traced to the collapse of the marketplace of the late Middle Ages and the shift toward extractive currencies and urban wage labor. The new scheme instead favored bigger players, such as chartered monopolies, which had better access to capital than regular little businesses and more means of paying back the interest. When monarchs and their favored merchants founded the first corporations, the idea that they would be obligated to grow didn’t look like such a problem. They had their nations’ governments and armies on their side—usually as direct investors in their projects. For the Dutch East India Company to grow was as simple as sending a few warships to a new region of the world, taking the land, and enslaving its people. If this sounds a bit like the borrowing advantages enjoyed today by companies like Walmart and Amazon, that’s because it’s essentially the same money system in operation, favoring the same sorts of players. Yet however powerful the favored corporations may appear, they are really just the engines through which the larger money system extracts value from everyone’s economic activity. Even megacorporations are like competing apps on a universally accepted, barely acknowledged smartphone operating system. Their own survival is utterly dependent on their ability to grow capital for their debtors and investors.

The first concerns how an investor should choose among different types of broad-based index funds. The best-known of the broad stock market mutual funds and ETFs in the United States track the S&P 500 index of the largest stocks. We prefer using a broader index that includes more smaller-company stocks, such as the Russell 3000 index or the Dow-Wilshire 5000 index. Funds that track these broader indexes are often referred to as “total stock market” index funds. More than 80 years of stock market history confirm that portfolios of smaller stocks have produced a higher rate of return than the return of the S&P 500 large-company index. While smaller companies are undoubtedly less stable and riskier than large firms, they are likely—on average—to produce somewhat higher future returns. Total stock market index funds are the better way for investors to benefit from the long-run growth of economic activity.

Here are some of the handicaps mutual-fund managers and other professional investors are saddled with: With billions of dollars under management, they must gravitate toward the biggest stocks—the only ones they can buy in the multimillion-dollar quantities they need to fill their portfolios. Thus many funds end up owning the same few overpriced giants. Investors tend to pour more money into funds as the market rises. The managers use that new cash to buy more of the stocks they already own, driving prices to even more dangerous heights. If fund investors ask for their money back when the market drops, the managers may need to sell stocks to cash them out. Just as the funds are forced to buy stocks at inflated prices in a rising market, they become forced sellers as stocks get cheap again. Many portfolio managers get bonuses for beating the market, so they obsessively measure their returns against benchmarks like the S & P 500 index. If a company gets added to an index, hundreds of funds compulsively buy it. (If they don’t, and that stock then does well, the managers look foolish; on the other hand, if they buy it and it does poorly, no one will blame them.) Increasingly, fund managers are expected to specialize. Just as in medicine the general practitioner has given way to the pediatric allergist and the geriatric otolaryngologist, fund managers must buy only “small growth” stocks, or only “mid-sized value” stocks, or nothing but “large blend” stocks.6 If a company gets too big, or too small, or too cheap, or an itty bit too expensive, the fund has to sell it—even if the manager loves the stock. So

Bashing free-market capitalism is high on the intellectual agenda nowadays. Since capitalism dominates our world, we should indeed make every effort to understand its shortcomings before they cause apocalyptic catastrophes. Yet criticising capitalism should not blind us to its advantages and attainments. So far it’s been an amazing success – at least if you ignore the potential for future ecological meltdown, and if you measure success by the yardstick of production and growth. In 2016 we may be living in a stressful and chaotic world, but the doomsday prophecies of collapse and violence have not materialised, whereas the scandalous promises of perpetual growth and global cooperation are fulfilled. Although we experience occasional economic crises and international wars, in the long run capitalism has not only managed to prevail, but also to rein in famine, plague and war. For thousands of years priests, rabbis and muftis explained that humans cannot control famine, plague and war by their own efforts. Then along came the bankers, investors and industrialists, and within 200 years managed to do exactly that. So the modern deal promised us unprecedented power – and the promise has been kept. Now what about the price? In exchange for power, the modern deal expects us to give up meaning. How did humans handle this chilling demand? Complying with it could easily have resulted in a dark world, devoid of ethics, aesthetics and compassion. Yet the fact remains that humankind is today not only far more powerful than ever, it is also far more peaceful and cooperative. How did humans manage that? How did morality, beauty and even compassion survive and flourish in a world devoid of gods, of heaven and of hell?

Patrick Vlaskovits, who was part of the initial conversation that the term “growth hacker” came out of, put it well: “The more innovative your product is, the more likely you will have to find new and novel ways to get at your customers.”12 For example: 1. You can create the aura of exclusivity with an invite-only feature (as Mailbox did). 2. You can create hundreds of fake profiles to make your service look more popular and active than it actually is—nothing draws a crowd like a crowd (as reddit did in its early days). 3. You can target a single service or platform and cater to it exclusively—essentially piggybacking off or even stealing someone else’s growth (as PayPal did with eBay). 4. You can launch for just a small group of people, own that market, and then move from host to host until your product spreads like a virus (which is what Facebook did by starting in colleges—first at Harvard—before taking on the rest of the population). 5. You can host cool events and drive your first users through the system manually (as Myspace, Yelp, and Udemy all did). 6. You can absolutely dominate the App Store because your product provides totally new features that everyone is dying for (which is what Instagram did—twenty-five thousand downloads on its first day—and later Snapchat). 7. You can bring on influential advisors and investors for their valuable audience and fame rather than their money (as About.me and Trippy did—a move that many start-ups have emulated). 8. You can set up a special sub-domain on your e-commerce site where a percentage of every purchase users make goes to a charity of their choice (which is what Amazon did with Smile.Amazon.com this year to great success, proving that even a successful company can find little growth hacks). 9. You can try to name a Planned Parenthood clinic after your client or pay D-list celebrities to say offensive things about themselves to get all sorts of publicity that promotes your book (OK, those stunts were mine).

There’s a tendency for those unfamiliar with cooperatives to look down on them as the leftovers of the mainstream economy, implying that if these ideologically driven people simply reorganized themselves into “normal” private companies, they would be more efficient and productive. In fact, just the opposite is true: Cooperatives often enter into economic activities that private businesses will not take on. The most fertile period of cooperative growth was during the Great Depression. Rural electric cooperatives spread across the American plains when it became clear that other investor-owned and municipally owned utilities were uninterested in wiring up sparsely populated regions. Credit unions, as we’ll soon explore, have seen an upsurge during the recent financial crisis.

Today I address professionals, business leaders and researchers on how they can contribute with innovative ideas to achieve these ten pillars. These are as follows: 1) A nation where the rural and urban divide has reduced to a thin line. 2) A nation where there is equitable distribution and adequate access to energy and quality water. 3) A nation where agriculture, industry and the service sector work together in symphony. 4) A nation where education with value systems is not denied to any meritorious candidates because of societal or economic discrimination. 5) A nation which is the best destination for the most talented scholars, scientists and investors. 6) A nation where the best of healthcare is available to all. 7) A nation where the governance is responsive, transparent and corruption free. 8) A nation where poverty has been totally eradicated, illiteracy removed and crimes against women and children are absent and no one in the society feels alienated. 9) A nation that is prosperous, healthy, secure, peaceful and happy and follows a sustainable growth path. 10) A nation that is one of the best places to live in and is proud of its leadership.

Some viewed Chinese investors as the latest “dumb money” to hit Hollywood. It is no doubt true that financing movies is not the smartest way for any investor, from anywhere in the world, to earn the best returns. Others had a different theory—that some wealthy Chinese individuals and businesses were seeking to get their money out of China, where an autocratic government could still steal anyone’s wealth at any time, for any reason. Certainly Hollywood had long been a destination for legal money laundering. But those who worked most closely with the Chinese knew that the biggest reason for these investments was a form of reverse-colonialism. After more than a decade as a place for Hollywood to make money, China wanted to turn the tables. The United States had already proved the power of pop culture to help establish a nation’s global dominance. Now China wanted to do the same. The Beijing government considered art and culture to be a form of “soft power,” whereby it could extend influence around the world without the use of weapons. Over the past few years, locally produced Chinese films had become more successful at the box office there. But most were culturally specific comedies and love stories that didn’t translate anywhere else. China had yet to produce a global blockbuster. And with box-office growth in that country slowing in 2016 and early 2017, hits that resonated internationally would be critical if the Communist nation was to grow its movie business and use it to become the kind of global power it wanted to be. So Chinese companies, with the backing of the government, started investing in Hollywood, with a mission to learn how experienced hands there made blockbusters that thrived worldwide. Within a few years, they figured, China would learn how to do that without anyone’s help. “Working with a company like Universal will help us elevate our skill set in moviemaking,” the head of the Chinese entertainment company Perfect World Pictures said, while investing $250 million in a slate of upcoming films from the American studio. Getting there wouldn’t be easy. One of the highest-profile efforts to produce a worldwide hit out of China was The Great Wall, starring Matt Damon and made by Wanda’s Legendary Pictures. The $150 million film, about a war against monsters set on the Chinese historic landmark, grossed an underwhelming $171 million and a disastrous $45 million in the United States. Then, to create another obstacle, Chinese government currency controls established in early 2017 slowed, at least temporarily, the flow of money from China into Hollywood. But by then it was too late to turn back. As seemed to always be true when it came to Hollywood’s relationship with China, the Americans had no choice but to keep playing along. Nobody else was willing to pour billions of dollars into the struggling movie business in the mid-2010s, particularly for original or lower-budget productions.

Consider the case of two very similar companies, Twitter and Tumblr. Both had brilliant, product-oriented founders in Evan “Ev” Williams and David Karp. Both were hot social media start-ups. Both grew at a remarkable rate after establishing product/ market fit. Both had a major impact on popular culture. Yet Twitter went public and achieved a market capitalization that peaked at nearly $ 37 billion, while Tumblr was acquired by Yahoo!—another start-up that used blitzscaling to become a scale-up, only to decline and fade away—for “only” $ 1 billion. Was this dumb luck on Twitter’s side? Perhaps. Luck always plays a larger role than founders, investors, and the media would like to admit. But a major difference was that Twitter could draw on numerous networks for advice and help that Tumblr could not. For example, Twitter was able to bring in Dick Costolo, a savvy executive with prior scaling experience at Google. In contrast, even though Tumblr was arguably the most prominent start-up in its New York City ecosystem, it couldn’t easily draw upon a pool of local talent who had experience dealing with rapid growth. According to Greylock’s John Lilly, for every executive role that Tumblr needed to fill, there were less than a handful of candidates in all of New York City.

Slack had spent nearly five years and $ 17 million on development prior to its public launch in February 2014. Just two months later, before the end of April, it had raised another $ 43 million. Both of these investments took place before Slack had proven its revenue model and started generating significant sales. Slack’s freemium business model (offering a free service and encouraging users to upgrade later to becoming paying customers) meant that even after two months of rapid user growth, the company hadn’t proven its ability to make money. Fortunately for Slack and its investors, this aggressiveness paid off. As the initial wave of free users started converting to paid, Slack was able to raise an additional $ 120 million six months later to accelerate its growth even further.

Since the election of Donald J. Trump, investors have become extremely exuberant about tax reform, deregulation and promises of economic growth. They think of the president as the archetypal billionaire and a magic bullet for all economic troubles. But the President won’t stop business cycles, and has far less control the economy than people believe.

Obvious prospects for physical growth in a business do not translate into obvious profits for investors. The experts do not have dependable ways of selecting and concentrating on the most promising companies in the most promising industries.

Following Dreman’s thinking led us to a plausible hypothesis. Suppose that the “P/ E effect” is caused by overreaction: high P/ E stocks (known as growth stocks because they are going to have to grow like crazy to justify their high prices) have gone up “too high” because investors have made overly optimistic forecasts of future growth rates, and low P/ E stocks, or value stocks, have sunk “too low,” because investors are excessively pessimistic. If true, the subsequent high returns to value stocks and low returns to growth stocks represent simple regression toward the mean.

The Connection Algorithm is the great idea that keeps you up at night. It’s the hobby you can’t ignore. It’s the conference you’ve always wanted to attend. It’s the blog post that changed your life. It’s the investor who funded your project. It’s curiosity, courage, failure, and success. In a word, the Connection Algorithm is a mindset, and this book will teach you how to harness it and use it to your advantage. If you build this mindset into your life, it will accelerate your personal growth and naturally lead you to forge relationships with highly connected, successful people. It will also open your eyes to a new lifestyle, freeing you from the shackles of the 9-5 desk job. If this sounds too good to be true, it should. The doubt of the crowd affords opportunity to the few, which is precisely why the Connection Algorithm works.

Mixing a broad index fund with small-cap value has produced the best results. U.S. equities are a core position in almost every growth investor’s portfolio.

The only thing that we know about financial predictions of startups is that 100 percent of them are wrong. If you can predict the future accurately, we have a few suggestions for other things you could be doing besides starting a risky early stage company. Furthermore, the earlier stage the startup, the less accurate any predications will be. While we know you can't predict your revenue with any degree of accuracy (although we are always very pleased in that rare case where revenue starts earlier and grows faster than expected), the expense side of your financial plan is very instructive as to how you think about the business. You can't predict your revenue with any level of precision, but you should be able to manage your expenses exactly to plan. Your financials will mean different things to different investors. In our case, we focus on two things: (1) the assumptions underlying the revenue forecast (which we don't need a spreadsheet for—we'd rather just talk about them) and (2) the monthly burn rate or cash consumption of the business. Since your revenue forecast will be wrong, your cash flow forecast will be wrong. However, if you are an effective manager, you'll know how to budget for this by focusing on lagging your increase in cash spend behind your expected growth in revenue.

The principal theory is mainly about how the investors perceive the growth of the company .

Publicly traded corporations direct financial surpluses back to investors, CEOs, and boards of directors. They have little incentive to churn it back into the business and, as we have seen, a great deal of incentive to maximize surpluses at the expense of employees, the environment, and even the corporation itself.82

creating a company for acquisition or IPO is different from building a profitable enterprise; it’s about building a sellable enterprise. Startups are not trying to earn revenue (which is a liability); they are setting themselves up to win more capital. They are not part of the real economy or even the real world but part of the process through which working assets are converted into new stockpiles of dead ones. That’s all they have really accomplished with whatever digital fad they’ve foisted onto the market or sold to yesterday’s tech winners. They thought they were engineering a new technology, when they were actually engineering a reallocation of capital. That’s why digital entrepreneurs who do win often end up becoming the next generation of venture capitalists. Everyone from Marc Andreessen (Netscape) to Sean Parker (Napster) to Peter Thiel (PayPal) to Jack Dorsey (Twitter) now runs venture funds of his own. Facebook and Google, once startups themselves, now acquire more businesses than they incubate internally. With each new generation, firms and investors leverage the startup economy more deliberately, or even cynically. After all, a win is a win.

Buffett asserted that the tendency to project out very high rates of growth has caused investors to lose tons of money. The “new economy” bubble was characterized by many such projections.4 Buffett

Teamconcurs is one of the most leading professional investment advisory firms providing the best financial planning services to investors. We have top financial advisers in Singapore for your constant business growth. Get in touch today.

Egg franchise sector is projected to grow at 10% in coming five years The growth of egg franchise sector in India will be increased due to urbanization, changing lifestyle and consumption pattern. Moreover, people demand more luxurious outlets to enjoy with friends and families while eating delicious egg dishes. A plethora of new egg franchise establishments have contributed towards massive development of egg industry. As per experts, the sector is estimated to grow at 10% in forthcoming years may become leading sector to attract more investors. There are numerous evolving trends in egg industry that are contributing to generating futuristic opportunities. Indore based start-up egg franchise brand, Andeywala has produced amazing business model to provide better infrastructure facilities at low investment. Now it becomes easy to start new business with Andeywala. Besides this, sector is expected to provide employment to millions of people, an increased number of egg restaurants will require employees. Tier 1 and tier 2 cities are crowded with food franchises but none of them exclusively egg dishes.

After years of being hounded by the same question—What’s the next new device?—Cook had finally delivered his answer: There isn’t one. His message hadn’t been aimed at Main Street; it was for Wall Street. He wanted investors to see that Apple was making a major shift. Rather than its products creating glory, Cook outlined a future in which Apple basked in the glory of others. He didn’t want to merely update the iPhone every year; he wanted people to pay Apple subscription fees for the movies they watched on that iPhone. He didn’t want to enable digital payments; he wanted Apple to be the processor of every transaction. And he didn’t want Apple to make the screen on which people read articles; he wanted to sell access to the magazines they read. For years, Cook had seen new revenue opportunities in each of those businesses. He had plotted a path to get there, buying Beats in 2014, courting Hollywood agents and directors in the years that had followed, and forging strong ties with Goldman Sachs throughout that time. He saw in all of it a way to shed the burden of a device business that was running out of juice and enter a world of services that promised unlimited growth.

Ocean, the future center of global trade. Why should it not prosper? Nobody can predict the future with 100 percent certainty. I’m not convinced it will happen. But I am a possibilist and these facts convince me: it is possible. The destiny instinct makes it difficult for us to accept that Africa can catch up with the West. Africa’s progress, if it is noticed at all, is seen as an improbable stroke of good fortune, a temporary break from its impoverished and war-torn destiny. The same destiny instinct also seems to make us take continuing Western progress for granted, with the West’s current economic stagnation portrayed as a temporary accident from which it will soon recover. For years after the global crash of 2008, the International Monetary Fund continued to forecast 3 percent annual economic growth for countries on Level 4. Each year, for five years, countries on Level 4 failed to meet this forecast. Each year, for five years, the IMF said, “Next year it will get back on track.” Finally, the IMF realized that there was no “normal” to go back to, and it downgraded its future growth expectations to 2 percent. At the same time the IMF acknowledged that the fast growth (above 5 percent) during those years had instead happened in countries on Level 2, like Ghana, Nigeria, Ethiopia, and Kenya in Africa, and Bangladesh in Asia. Why does this matter? One reason is this: the IMF forecasters’ worldview had a strong influence on where your retirement funds were invested. Countries in Europe and North America were expected to experience fast and reliable growth, which made them attractive to investors. When these forecasts turned out to be wrong, and when these countries did not in fact grow fast, the retirement funds did not grow either. Supposedly low-risk/high-return countries turned out to be high-risk/low-return countries. And at the same time African countries with great growth potential were being starved of investment. Another reason it matters, if you work for a company based in the old “West,” is that you are probably missing opportunities in the largest expansion of the middle-income consumer market in history, which is taking place right now in Africa and Asia. Other, local brands are already establishing a foothold, gaining brand recognition, and spreading throughout these continents, while you are still waking up to what is going on. The Western consumer market was just a teaser for what is coming next.

but the truth is that comparing what private equity firms used to be—and where the perception of private equity still sits in many quarters—to what they are now is like comparing a Motorola cellphone from the 1990s to the latest iPhone. There’s a world of differences; it’s not even close. For pension funds and other investors in private equity funds, the firms they back gives them access to investment opportunities they can’t find or execute themselves. What’s more, they get consistent investment returns out of these opportunities, whether they include leveraged buyouts, credit investments, infrastructure assets, essential utilities, real estate transactions, technology deals, natural resources projects, banks, insurance companies, or life science opportunities. They can buy companies, carve out businesses, build up companies through acquisitions and organic growth, spin off businesses, take companies private from the public market, buy businesses from other funds they manage, draw margin loans to finance dividends, and refinance the capital structure pre-exit. And more besides.

Private capital is the new Big Finance. And with interest rates still low and parts of Wall Street firmly out of the spaces that private equity firms want to grow further in, the industry has room to be creative and grow its share of retirees’ balance sheets by managing even larger slices of pension fund money. This is active investing on a huge scale. Not market tracking, not index following. Private equity firms are always raising capital for one strategy or another, always deploying investors’ money with one hand and returning cash back with the other. Their customers tend to commit to more than one fund and are increasingly sticky, usually returning for more. They have built high-growth businesses that are getting better every day. They’re always winning.

Adam viewed the costs of WeWork’s expansion as an obstacle with a simple solution. He told potential investors that WeWork could grow at whatever rate they wanted, so long as they were willing to fund it: demand for the company’s offices was so strong that the only restriction on its growth was how much money it could spend building new ones. “Adam’s attitude was, ‘Tell me how much revenue you want me to produce, and I’ll tell you how much capital I need,’” one member of WeWork’s fundraising team said

To fill this gap in the capital market, Davis and Rock set themselves up as a limited partnership, the same legal structure that had been used by a short-lived rival called Draper, Gaither & Anderson.[18] Rather than identifying startups and then seeking out corporate investors, they began by raising a fund that would render corporate investors unnecessary. As the two active, or “general,” partners, Davis and Rock each seeded the fund with $100,000 of their own capital. Then, ignoring the easy loans to be had from the fashionable SBIC structure, they raised just under $3.2 million from some thirty “limited” partners—rich individuals who served as passive investors.[19] The beauty of this size and structure was that the Davis & Rock partnership now had a war chest seven and a half times larger than an SBIC, and with it the ammunition to supply companies with enough capital to grow aggressively. At the same time, by keeping the number of passive investors under the legal threshold of one hundred, the partnership flew under the regulatory radar, avoiding the restrictions that ensnared the SBICs and Doriot’s ARD.[20] Sidestepping yet another weakness to be found in their competitors, Davis and Rock promised at the outset to liquidate their fund after seven years. The general partners had their own money in the fund, and thus a healthy incentive to invest with caution. At the same time, they could deploy the outside partners’ capital for a limited time only. Their caution would be balanced with deliberate aggression. Indeed, everything about the fund’s design was calculated to support an intelligent but forceful growth mentality. Unlike the SBICs, Davis & Rock raised money purely in the form of equity, not debt. The equity providers—that is, the outside limited partners—knew not to expect dividends, so Davis and Rock were free to invest in ambitious startups that used every dollar of capital to expand their business.[21] As general partners, Davis and Rock were personally incentivized to prioritize expansion: they took their compensation in the form of a 20 percent share of the fund’s capital appreciation. Meanwhile, Rock was at pains to extend this equity mentality to the employees of his portfolio companies. Having witnessed the effect of employee share ownership on the early culture of Fairchild, he believed in awarding managers, scientists, and salesmen with stock and stock options. In sum, everybody in the Davis & Rock orbit—the limited partners, the general partners, the entrepreneurs, their key employees—was compensated in the form of equity.

Rock and his partner articulated an approach to risk management that would resonate with future venture capitalists. Modern portfolio theory, the set of ideas that was coming to dominate academic finance, stressed diversification: by owning a broad mix of assets exposed to a wide variety of uncorrelated risks, investors could reduce the overall volatility of their holdings and improve their risk-return ratio. Davis and Rock ignored this teaching: they promised to make concentrated bets on a dozen or so companies. Although this would entail obvious perils, these would be tolerable for two reasons. First, by buying just under half of a firm’s equity, the Davis & Rock partnership would get a seat on the board and a say in its strategy: in the absence of diversification, a venture capitalist could manage his risk by exercising a measure of control over his assets. Second, Davis and Rock insisted that they would invest only in ambitious, high-growth companies—ones whose value might jump at least tenfold in five to seven years. To critics who called this test excessively demanding, Davis retorted that it would be “unwise to accept a less stringent one.” Venture investing was necessarily speculative, he explained, and most startups would fail; therefore, the winners would have to win big enough to make a success of the portfolio.[25]

In the beginning, repeating a habit is essential to build up evidence of your desired identity. As you latch on to that new identity, however, those same beliefs can hold you back from the next level of growth. When working against you, your identity creates a kind of "pride" that encourages you to deny your weak spots and prevents you from truly growing. This is one of the greatest downsides of building habits... One solution is to avoid making any single aspect of your identity an overwhelming portion of who you are. In the words of investor Paul Graham, "keep your identity small." The more you let a single belief define you, the less capable you are of adapting when life challenges you. If you tie everything up in being the point guard or the partner at the firm or whatever else, then the loss of that facet of your life will wreck you. If you're a vegan and then develop a health condition that forces you to change your diet, you'll have an identity crisis on your hands. When you cling too tightly to one identity, you become brittle. Lose that one thing and you lose yourself... When chosen effectively, an identity can be flexible rather than brittle. Like water flowing around an obstacle, your identity works with the changing circumstances rather than against them. p247

Consider two investors, Sam Scared and Charlie Compounder. Suppose Sam Scared starts with $1; each time it doubles, he puts his $1 profit in a sock instead of reinvesting it. After ten doublings, Sam has a profit in the sock of $1 × 10 plus his original $1 for a total of $11. Charlie also starts with $1 and makes the same investments but lets his profit ride. His $1 becomes $2, $4, $8, et cetera, until after ten doublings he has $1,024. Sam’s wealth grows as $1, $2, $3…$11. This is called simple growth, arithmetic growth, or growth by addition. Charlie’s increases as $1, $2, $4…$1,024. This is known variously as compound, exponential, geometric, or multiplicative growth. Over a sufficiently long time, compound growth at a small rate will vastly exceed any rate of arithmetic growth, no matter how large! For instance, if Sam Scared made 100 percent a year and put it in a sock and Charlie Compounder made only 1 percent a year but reinvested it, Charlie’s wealth would eventually exceed Sam’s by as much as you please. This is true even if Sam started with far more than Charlie, even $1 billion to Charlie’s $1. Realizing this truth, Robert Malthus (1766–1834), believing that population grew geometrically and resources grew arithmetically, forecast increasingly great misery.

I am a passive investor optimistic in the world’s ability to generate real economic growth and I’m confident that over the next 30 years that growth will accrue to my investments.

Many financial analysts will find Emerson and Emery more interesting and appealing stocks than the other two—primarily, perhaps, because of their better “market action,” and secondarily because of their faster recent growth in earnings. Under our principles of conservative investment the first is not a valid reason for selection—that is something for the speculators to play around with. The second has validity, but within limits. Can the past growth and the presumably good prospects of Emery Air Freight justify a price more than 60 times its recent earnings?1 Our answer would be: Maybe for someone who has made an in-depth study of the possibilities of this company and come up with exceptionally firm and optimistic conclusions. But not for the careful investor who wants to be reasonably sure in advance that he is not committing the typical Wall Street error of overenthusiasm for good performance in earnings and in the stock market.* The same cautionary statements seem called for in the case of Emerson Electric, with a special reference to the market’s current valuation of over a billion dollars for the intangible, or earning-power, factor here. We should add that the “electronics industry,” once a fair-haired child of the stock market, has in general fallen on disastrous days. Emerson is an outstanding exception, but it will have to continue to be such an exception for a great many years in the future before the 1970 closing price will have been fully justified by its subsequent performance. By contrast, both ELTRA at 27 and Emhart at 33 have the earmarks of companies with sufficient value behind their price to constitute reasonably protected investments. Here the investor can, if he wishes, consider himself basically a part owner of these businesses, at a cost corresponding to what the

In 1988, NDTV got a good contract from Doordarshan to produce a famous weekly show called The World This Week, which was anchored by the owner Prannoy Roy. As per records, Doordarshan granted Rs.2 lakhs ($6000[1]) per episode to NDTV, which was a princely sum in those days. Incidentally the head of Doordarshan at that time was Bhaskar Ghose and his son-in-law journalist Rajdeep Sardesai became the No. 2 in NDTV. The Congress Party was in power then and showed all possible support to NDTV and provided a red-carpet welcome to the private media unit to enjoy the national resources of Doordarshan. Every resource and infrastructure of Doordarshan was used for NDTV’s growth. In fact, in the early days (1995-1997), it is this tax payer money (Doordarshan contract) that got him personal gains again when he did “sweet” private equity deals (for sale of personal stake belonging to him and his wife) to a few global private equity funds. Thus, he built a business from patronage (government money) and then created value and cashed some of it by selling to private equity investors such as Goldman Sachs, Morgan Stanley, Alliance Capital, Jardine Fleming etc.

Emery Air Freight must be the most promising of the four companies in terms of future growth, if the price/earnings ratio of nearly 40 times its highest reported earnings is to be even partially justified. The past growth, of course, has been most impressive. But these figures may not be so significant for the future if we consider that they started quite small, at only $570,000 of net earnings in 1958. It often proves much more difficult to continue to grow at a high rate after volume and profits have already expanded to big totals. The most surprising aspect of Emery’s story is that its earnings and market price continued to grow apace in 1970, which was the worst year in the domestic air-passenger industry. This is a remarkable achievement indeed, but it raises the question whether future profits may not be vulnerable to adverse developments, through increased competition, pressure for new arrangements between forwarders and airlines, etc. An elaborate study might be needed before a sound judgment could be passed on these points, but the conservative investor cannot leave them out of his general reckoning.

Adequate size. A sufficiently strong financial condition. Continued dividends for at least the past 20 years. No earnings deficit in the past ten years. Ten-year growth of at least one-third in per-share earnings. Price of stock no more than 1½ times net asset value. Price no more than 15 times average earnings of the past three years.

The second possibility is of a quite different sort. Perhaps many of the security analysts are handicapped by a flaw in their basic approach to the problem of stock selection. They seek the industries with the best prospects of growth, and the companies in these industries with the best management and other advantages. The implication is that they will buy into such industries and such companies at any price, however high, and they will avoid less promising industries and companies no matter how low the price of their shares. This would be the only correct procedure if the earnings of the good companies were sure to grow at a rapid rate indefinitely in the future, for then in theory their value would be infinite. And if the less promising companies were headed for extinction, with no salvage, the analysts would be right to consider them unattractive at any price. The

The second possibility is of a quite different sort. Perhaps many of the security analysts are handicapped by a flaw in their basic approach to the problem of stock selection. They seek the industries with the best prospects of growth, and the companies in these industries with the best management and other advantages. The implication is that they will buy into such industries and such companies at any price, however high, and they will avoid less promising industries and companies no matter how low the price of their shares. This would be the only correct procedure if the earnings of the good companies were sure to grow at a rapid rate indefinitely in the future, for then in theory their value would be infinite. And if the less promising companies were headed for extinction, with no salvage, the analysts would be right to consider them unattractive at any price. The truth about our corporate ventures is quite otherwise. Extremely few companies have been able to show a high rate of uninterrupted growth for long periods of time. Remarkably few, also, of the larger companies suffer ultimate extinction. For most, their history is one of vicissitudes, of ups and downs, of change in their relative standing. In some the variations “from rags to riches and back” have been repeated on almost a cyclical basis—the phrase used to be a standard one applied to the steel industry—for others spectacular changes have been identified with deterioration or improvement of management.

The purpose of this chapter is to explain what it means for skillful investors to add value. To accomplish that, I’m going to introduce two terms from investment theory. One is beta, a measure of a portfolio’s relative sensitivity to market movements. The other is alpha, which I define as personal investment skill, or the ability to generate performance that is unrelated to movement of the market. As I mentioned earlier, it’s easy to achieve the market return. A passive index fund will produce just that result by holding every security in a given market index in proportion to its equity capitalization. Thus, it mirrors the characteristics—e.g., upside potential, downside risk, beta or volatility, growth, richness or cheapness, quality or lack of same—of the selected index and delivers its return. It epitomizes investing without value added. Let’s say, then, that all equity investors start not with a blank sheet of paper but rather with the possibility of simply emulating an index. They can go out and passively buy a market-weighted amount of each stock in the index, in which case their performance will be the same as that of the index. Or they can try for outperformance through active rather than passive investing.

Obvious prospects for physical growth in a business do not translate into obvious profits for investors

In Brave’s case, the risk might be that the billion tokens it issued are treated like long-term investments, hoarded by investors who withhold them from circulation. In that case, the BATs’ value won’t accurately reflect the market for user attention. A critical mass of use, not holding, is needed. Brave’s model included a token-issuance strategy for dealing with that challenge. It set aside a 300 million–strong “user growth pool” to attract new users. There’s a plan, for example, to deliver a small amount of BATs to the integrated Brave wallet whenever there’s a unique new download of the browser. In this way, the token is designed as a tool to bootstrap adoption, to foster network effects. “Early on we saw this as something that would allow us to stake users with initial grants,” says Brave CEO Brendan Eich. The strategy was shaped by Eich’s decades in Silicon Valley, where the veteran engineer created the ubiquitous Web programming language JavaScript in the nineties and later went on to co-found browser developer Mozilla. Over time, he realized that venture capitalists were reluctant to fund the marketing cost of acquiring users and that tapping new equity or debt to do so was dilutive to the founders’ and early investors’ ownership stakes. “But with a token, it can be disbursed to users without credit consequences,” he adds, arguing that by contrast to a dollar’s worth of equity or debt, “the BAT is a social credit currency; it doesn’t have this inflationary property.

For those in their twenties, a very aggressive investment portfolio is recommended. At this age, there is lots of time to ride out the peaks and valleys of investment cycles, and you have a lifetime of earnings from employment ahead of you. The portfolio is not only heavy in common stocks but also contains a substantial proportion of international stocks, including the higher-risk emerging markets. As mentioned in chapter 8, one important advantage of international diversification is risk reduction. Plus, international diversification enables an investor to gain exposure to other growth areas in the world even as world markets become more closely correlated.

The fact is that one person’s growth stock is another’s value stock. Recently, the investment data company Lipper has reported that Citigroup, AIG and IBM are among the top 15 mutual fund holdings in both the large company “value” and “growth” categories. This brings us to our next point, which perhaps best explains why Marathon should never be labelled as a pure value investor. Our capital cycle process examines the effects of the creative and destructive forces of capitalism over time. A growth stock usually becomes a value stock after excess capital, lured in by large current profitability, brings about a decline in returns. When this becomes extreme, as was the case during the technology bubble, the resultant bust can turn growth stocks into value stocks almost overnight. The telecoms sector provides

Do not let limiting beliefs impede your growth.

Charles T. Munger is fond of saying that there are “more banks than bankers.” A competitive advantage based on a willingness to make loans in an instant would be anathema to old-fashioned bankers. Of particular concern to us is the extent to which Irish bankers engage in the hard-sell to investors. One of them declared at the conference we recently attended: “I am here unashamedly to sell you X bank!” This rather goes against our preference for bankers as cautious individuals, obsessed with long-term downside risks. As we have seen in many other businesses, an obsession with growth, combined with overpromotion, is likely to end in tears. As to when this will happen, we must wait for time, Ireland’s proverbial story teller.

But three flaws still existed. There was no regulation. With all the growth in the market, there were no calls to regulate Repo financing, securities dealers, or government bonds. The securities rules set up in the 1930s mainly targeted individual investors, the stock market, and banks. For years, there was never an outcry to regulate the government bond market. Large, sophisticated investors buying and selling AAA-rated, risk free, government bonds was not high on the to-do list. And free markets were much more a rallying cry in the 1980s than it is today. Then, and this is a big one, it was still market convention to price Repo transactions without including the coupon accrued interest. Accrued interest was basically just ignored by the Repo market. Third, there was uncertainty in terms of the legal status of Repo. What happened if a Repo counterparty went bankrupt or became insolvent? Was Repo a secured loan or a sale with an agreement to repurchase? No one really knew and it was never tested. Even the bankruptcy court was unsure whether a Repo was a collateralized loan or a sale and buy-back.

They won't expect profitability yet; investors know that growth is a ferocious consumer of resources. That's what their money is for.

The best on horses you think will lose are a valuable "insurance policy." When rare disaster strikes, you'll be glad you had the insurance. 71 The exponential growth of wealth in the Kelly system is also a consequence of proportional betting. As the bankroll grows, make larger bets. 98 [2 questions are central to John Kelly's analysis] What level of risk will lead to the highest long-run return? What is the chance of losing everything? 286 As Fred Schwed, Jr. author of Where are the Customer's Yatchs? put it back in 1940, "Like all of life's rich emotional experiences, the full flavor of losing important money cannot be conveyed in literature." 304 Claude Shannon: A smart investor should understand where he has an edge and invest only in those opportunities. 308 The longer you hold a stock, the harder it is to beat the market by much. 316

The cornerstone of the company’s culture was a philosophy Danny called Enlightened Hospitality, which upended traditional hierarchies by prioritizing the people who worked there over everything else, including the guests and the investors. This didn’t mean the customer suffered; in fact, the opposite. Danny’s big idea was to hire great people, treat them well, and invest deeply into their personal and professional growth, and they would take great care of the customers—which is exactly what they did.

Most’s eclectic background also provided the spark behind the invention of what would become known as the ETF. During his travels around the Pacific, he had appreciated the efficiency of how traders would buy and sell warehouse receipts of commodities, rather than the more cumbersome physical vats of coconut oil, barrels of crude, or ingots of gold. This opened up a panoply of opportunities for creative financial engineers. “You store a commodity and you get a warehouse receipt and you can finance on that warehouse receipt. You can sell it, do a lot of things with it. Because you don’t want to be moving the merchandise back and forth all the time, so you keep it in place and you simply transfer the warehouse receipt,” he later recalled.19 Most’s ingenious idea was to, after a fashion, mimic this basic structure. The Amex could create a kind of legal warehouse where it could place the S&P 500 stocks, and then create and list shares in the warehouse itself for people to trade. The new warehouse-cum-fund would take advantage of the growth and electronic evolution in portfolio trading—the simultaneous buying and selling of big baskets of stocks first pioneered by Wells Fargo two decades earlier—and a little-known aspect of mutual funds: They can do “in kind” transactions, exchanging shares in a fund for a proportional amount of the stocks it contains, rather than cash. Or an investor can gather the correct proportion of the underlying stocks and exchange them for shares in the fund. Stock exchange “specialists”—the trading firms on the floor of the exchange that match buyers and sellers—would be authorized to be able to create or redeem these shares according to demand. They could take advantage of any differences that might open up between the price of the “warehouse” and the stock it contained, an arbitrage opportunity that should help keep it trading in line with its assets. This elegant creation/redemption process would also get around the logistical challenges of money coming in and out continuously throughout the day—one of Bogle’s main practical concerns. In basic terms, investors can either trade shares of the warehouse between themselves, or go to the warehouse and exchange their shares in it for a slice of the stocks it holds. Or they can turn up at the warehouse with a suitable bundle of stocks and exchange them for shares in the warehouse. Moreover, because no money changes hands when shares in the warehouse are created or redeemed, capital gains tax can be delayed until the investor actually sells their shares—a side effect that has proven vital to the growth of ETFs in the United States. Only when an ETF is actually sold will investors have to pay any capital gains taxes due.

FERNANDO IS NO APOLOGIST FOR the investment industry, arguing that despite huge strides over the past two decades there are still many mediocre money managers who spend too much time and money chasing the latest hot idea. As a result, retail investors often “get taken for a ride,” she concedes. But she worries that the now-indiscriminate shift into passive investment strategies is eroding the central role that financial markets play in the economy, with money blindly shoveled into stocks according to their size, rather than their prospects. “The stock market is supposed to be a capital allocation machine. But by investing passively you are just putting money into the past winners, rather than the future winners,” she argues. In other words, beyond the impact on markets or other investors, is the growth of index investing having a deleterious impact on economic dynamism?

There is a conundrum at the heart of the efficient-markets hypothesis, often called the Grossman-Stiglitz Paradox after a seminal 1980 paper written by hedge fund manager Sanford Grossman and the Nobel laureate economist Joseph Stiglitz.22 “On the Impossibility of Informationally Efficient Markets” was a frontal assault on Eugene Fama’s theory, pointing out that if market prices truly perfectly reflected all relevant information—such as corporate data, economic news, or industry trends—then no one would be incentivized to collect the information needed to trade. After all, doing so is a costly pursuit. But then markets would no longer be efficient. In other words, someone has to make markets efficient, and somehow they have to be compensated for the work involved. This paradox has hardly held back the growth of passive investing. Many investors gradually realized that whatever academic theory one subscribes to, the cold unforgiving fact is that over time most active managers underperform their benchmarks. Even if they do beat the market, a lot of the “alpha” they produce is then often gobbled up by their fees. With his usual wit, Bogle dubbed this the “Cost Matters Hypothesis.”23 However, the truth of the Grossman-Stiglitz Paradox does raise some pertinent questions around whether markets may become less efficient as more and more investing is done through index funds.

On January 7, 1973, the New York Times featured an interview with one of the nation’s top financial forecasters, who urged investors to buy stocks without hesitation: “It’s very rare that you can be as unqualifiedly bullish as you can now.” That forecaster was named Alan Greenspan, and it’s very rare that anyone has ever been so unqualifiedly wrong as the future Federal Reserve chairman was that day: 1973 and 1974 turned out to be the worst years for economic growth and the stock market since the Great Depression.

It’s Just Not Logical Compound interest also gives results that don’t look at all logical. Think about two young people who want to start investment programs. One starts at 18 years of age and faithfully invests just $1000 a year. At age 30 she stops this particular program so she can buy a house and start paying it off. She leaves the original investment to run along on its own with the earnings compounding. The other investor dithers around until age 30 and then starts to invest too. However, to make up for lost time, he puts away $2000 a year till age 65. Who do you think would end up with the most money if they both averaged 10% per annum? Is it the woman who invested $1000 a year for 13 years and then let the balance compound for 35 years, or the man who invested $2000 a year for 35 years? Amazing as it may seem, the woman would have $690,000 for a total investment of $13,000; the man would have $542,000 for a total investment of $70,000. Can you see why it happens? Because after 13 years her $1000 a year has grown to $24,500 and the compound growth on that in the 14th year alone is $2450 a year. That is almost 25% more than the man was contributing. Accordingly he can never catch her, only because she started first.

To fit into the Golden Straitjacket a country must either adopt, or be seen as moving toward, the following golden rules: making the private sector the primary engine of its economic growth, maintaining a low rate of inflation and price stability, shrinking the size of its state bureaucracy, maintaining as close to a balanced budget as possible, if not a surplus, eliminating and lowering tariffs on imported goods, removing restrictions on foreign investment, getting rid of quotas and domestic monopolies, increasing exports, privatizing state-owned industries and utilities, deregulating capital markets, making its currency convertible, opening its industries, stock and bond markets to direct foreign ownership and investment, deregulating its economy to promote as much domestic competition as possible, eliminating government corruption, subsidies and kickbacks as much as possible, opening its banking and telecommunications systems to private ownership and competition and allowing its citizens to choose from an array of competing pension options and foreign-run pension and mutual funds. When you stitch all of these pieces together you have the Golden Straitjacket. . . . As your country puts on the Golden Straitjacket, two things tend to happen: your economy grows and your politics shrinks. That is, on the economic front the Golden Straitjacket usually fosters more growth and higher average incomes—through more trade, foreign investment, privatization and more efficient use of resources under the pressure of global competition. But on the political front, the Golden Straitjacket narrows the political and economic policy choices of those in power to relatively tight parameters. . . . Governments—be they led by Democrats or Republicans, Conservatives or Labourites, Gaullists or Socialists, Christian Democrats or Social Democrats—that deviate too far from the core rules will see their investors stampede away, interest rates rise and stock market valuations fall.36

Recent research suggests that “quality of management” is becoming an increasingly important factor in investor decisions. This may be because investors believe that a company that has a strong and predictable leadership pipeline is more likely to be able to generate sustained earnings growth. For this reason, a company’s “leadership brand” can be a very valuable asset in today’s investment community.

Perhaps many of the security analysts are handicapped by a flaw in their basic approach to the problem of stock selection. They seek the industries with the best prospects of growth, and the companies in these industries with the best management and other advantages. The implication is that they will buy into such industries and such companies at any price, however high, and they will avoid less promising industries and companies no matter how low the price of their shares. This would be the only correct procedure if the earnings of the good companies were sure to grow at a rapid rate indefinitely in the future, for then in theory their value would be infinite. And if the less promising companies were headed for extinction, with no salvage, the analysts would be right to consider them unattractive at any price.

Business was booming for Tiffany & Co. in the late 1990s, thanks to the introduction of a new affordable silver jewellery line. The $110 silver charm bracelet inscribed with the Tiffany name was coveted by teenage girls, causing sales of the new silver product line to skyrocket 67% between 1997 and 2002. By 2003, company earnings had doubled and the silver jewellery line accounted for a third of Tiffany’s U.S. sales. And yet the queues of excited girls didn’t fill the store managers with joy. Sure, sales were up and stores were busy, but the people close to the brand, who understood its heritage, began to worry that this lower price point would forever change how the brand was perceived by its high-end customers. “We didn’t want the brand to be defined by any single product.” —Michael Kowalski, CEO, Tiffany & Co. Despite some unease from investors, Tiffany raised prices on their most popular silver products by 30% over the next three years and managed to halt the growth of their highly profitable silver line. And so the company sacrificed short-term gain and profits for the long-term good of the brand by telling the story they wanted customers to believe—that Tiffany’s represents something special. A client recently told me about her friend’s excited engagement announcement on Facebook. All she did was post a photo of the Tiffany blue box—not a picture of the ring in sight. The box alone was enough to say everything she wanted to say. QUESTIONS FOR YOU How are you least like the competition?

Supercapitalism has triumphed as power has shifted to consumers and investors. They now have more choice than ever before, and can switch ever more easily to better deals. And competition among companies to lure and keep them continues to intensify. This means better and cheaper products, and higher returns. Yet as supercapitalism has triumphed, its negative social consequences have also loomed larger. These include widening inequality as most gains from economic growth go to the very top, reduced job security, instability of or loss of community, environmental degradation, violations of human rights abroad, and a plethora of products and services pandering to our basest desires. These consequences are larger in the United States than in other advanced economies because America has moved deeper into supercapitalism. Other economies, following closely behind, have begun to experience many of the same things. Democracy is the appropriate vehicle for responding to such social consequences. That’s where citizen values are supposed to be expressed, where choices are supposed to be made between what we want for ourselves as consumers and investors, and what we want to achieve together. But the same competition that has fueled supercapitalism has spilled over into the political process. Large companies have hired platoons of lobbyists, lawyers, experts, and public relations specialists, and devoted more and more money to electoral campaigns. The result has been to drown out voices and values of citizens. As all of this has transpired, the old institutions through which citizen values had been expressed in the Not Quite Golden Age—industry-wide labor unions, local citizen-based groups, “corporate statesmen” responding to all stakeholders, and regulatory agencies—have been largely blown away by the gusts of supercapitalism. Instead of guarding democracy against the disturbing side effects of supercapitalism, many reformers have set their sights on changing the behavior of particular companies—extolling them for being socially virtuous or attacking them for being socially irresponsible. The result has been some marginal changes in corporate behavior. But the larger consequence has been to divert the public’s attention from fixing democracy. 1

Value = Current (Normal) Earnings × (8.5 plus twice the expected annual growth rate)

1. You can create the aura of exclusivity with an invite-only feature (as Mailbox did). 2. You can create hundreds of fake profiles to make your service look more popular and active than it actually is—nothing draws a crowd like a crowd (as reddit did in its early days). 3. You can target a single service or platform and cater to it exclusively—essentially piggybacking off or even stealing someone else’s growth (as PayPal did with eBay). 4. You can launch for just a small group of people, own that market, and then move from host to host until your product spreads like a virus (which is what Facebook did by starting in colleges—first at Harvard—before taking on the rest of the population). 5. You can host cool events and drive your first users through the system manually (as Myspace, Yelp, and Udemy all did). 6. You can absolutely dominate the App Store because your product provides totally new features that everyone is dying for (which is what Instagram did—twenty-five thousand downloads on its first day—and later Snapchat). 7. You can bring on influential advisors and investors for their valuable audience and fame rather than their money (as About.me and Trippy did—a move that many start-ups have emulated). 8. You can set up a special sub-domain on your e-commerce site where a percentage of every purchase users make goes to a charity of their choice (which is what Amazon did with Smile.Amazon.com this year to great success, proving that even a successful company can find little growth hacks).

The third D is deferrable. Tax law allows you to use IRAs and 1031 exchanges to buy and sell investment real estate while deferring the tax hit to a more advantageous time. IRA funds can be invested in real estate, and as long as any profits from rental income or property sales remain in the IRA, those profits are tax-deferred. The 1031 exchanges give you a choice at the moment of sale either to realize the gain and pay taxes on it or to reinvest that gain in another property and defer the taxes. And when you choose to reinvest, the transaction is treated as if you simply exchanged equity in one property for equity in another. The government has established these tax-deferring vehicles as a way for investors to reinvest real estate profits without having to pay the taxes until later. Millionaire Real Estate Investors believe that taxes deferred until tomorrow are always better than taxes paid today. As a result, they make use of these programs to preserve their profits as they go, giving them more to reinvest and accelerating the growth of their real estate portfolios. U.S.

She reverse engineered a startup based on market conditions, industry trends, and nascent investor fads.

All of us keep learning. As human beings we learn to walk, talk, ride bicycle, swim by consistent practice. Every things requires time. Making mistakes and rectifying those mistakes by constant retrospection are parts natural growth process. And

It is increasingly a world of calories without nutritional value, stories without comfort, information without knowledge, contacts without friendship, politics without community, creation without beauty, activities lacking sense. On the basis of a growing spiral of debt, only quantitative, but not qualitative growth can thrive.

Higher payoffs for success increase the supply of properly trained talent, and these higher payoffs motivate innovators, entrepreneurs, and investors to take risks. These two effects loosen the current constraints on growth, which frees the economy to grow faster. Faster growth increases middle- and working-class wages when the supply of lesser-skilled labor is constrained. Otherwise, it increases employment rather than wages. With smaller payoffs, growth would be even slower than it is. Naturally,

Nike, Microsoft Amazon and similar companies went public relatively early in their growth cycles. As a result, public investors had the opportunity to participate in 95 to 99% of their overall price appreciation. Founders, early employees and VCs took all the risk. Most of the reward was left for grabbing – anyone could’ve bought those stocks on the secondary markets.   As the Federal Reserve prints more money and interest rates remain low, an increasing percentage of capital is flowing into risky asset classes like venture capital and “angel investing.” This capital has chased up valuations in the pipeline preceding IPOs, making the IPOs feel more like the end of the journey, not the beginning. Thus,

The superior performance of the original S&P 500 firms surprises most investors. But value investors (as described in Chapter 12) know that growth stocks often are priced too high, and excitement over their prospects often induces investors to pay too high a price. Profitable firms that do not catch investors’ eyes are often underpriced. If investors reinvest the dividends of such firms, they are buying undervalued shares that will add significantly to their return.

Driving the move is a focus by Beijing on the Internet and innovation-driven sectors to boost slowing growth by easing listing rules. Another factor is a stock rally that has seen the Shanghai Composite Index climb 43% this year, although it fell 6.5% on Thursday. Meanwhile, Chinese investors are pouring money into funds that target startups. In 2014, 39 angel investment funds were set up in China, raising $1.07 billion, a 143% increase from the previous high in 2012, according to investment database pedata.cn, which is run by Zero2IPO Research in Beijing. Angel investors typically provide personal funds to finance small startups. High valuations and the loosening of listing rules will draw more Chinese companies to their home market, said Jianbin Gao of PricewaterhouseCoopers in China. “We anticipate significant growth in technology listings on domestic exchanges,” he said.

Oil and Gas Investing in Permian Basin-Smart Move As the true scope of Permian Basin is being understood, one thing is very clear; it is going to attract a lot of investment. As in case of all oil and gas investments, the sooner you invest, the better your returns are going to be. Right now is the perfect time for oil and gas investing in Permian Basin. There are a lot of benefits of choosing to invest in things other than the property, shares and stocks circuit. It not just helps you spread out your earnings, it lets you test potential markets such as these. As these markets are not overcrowded, there is more scope for growth. But why should you choose oil and gas investing in Permian Basin when you have dependable assets elsewhere? The answer is that those assets multiply at such a slow pace that you forget they are there while when there is an oil and gas boom, it turns your fortunes. An oil well investment brings with it years of steady income with the benefit of tax deduction on the investment. It is not as much a gamble as it is made out to be and oil strikes are more frequent than people would like you to believe. About 15% annual income from oil and gas wells is exempt from tax and 65-85% of your first year's investment can be waived off. Gone are the days when all you could do with oil well was bore increasingly downwards, vertically. Now there is technology available that lets you draw oil supply for a long, long time after the initial vertical bore runs dry. With new advancements in drilling and extracting techniques, a lot of oil that was earlier as good as not being there has suddenly become readily available. Being with a company that is well equipped with the latest technology gives your investment more stability. That is one of the reasons for a revival of the boom in Permian Basin and it has been predicted to last for a long time to come. Choose with great care a reliable and experienced company that is a seasoned hand at oil and gas drilling and production. Oil and gas investing in Permian Basin is bound to attract many investors looking to be a part of the upward trend. Invest today and reap benefits for years to come.

Financial markets strive to be forward-looking, but not when it comes to underfollowed small cap stocks in obscure industries. Such stocks remain under the radar of most investors until they report huge acceleration in earnings growth. When a company that used to grow at 5 to 10% suddenly reports a 300% increase in earnings and a 100% increase in sales, it will grab the attention of many investors.

South-east Asia’s high savings rates, most of which flowed into bank deposits, lent themselves to outsize banking systems, which invited godfather abuse. There is, in turn, a pretty direct line from the insider manipulation of regional banks to the Asian financial crisis. The ‘over-banked’ nature of south-east Asia also helps explain a conundrum that has occupied some of the region’s equity investors: why, despite heady economic growth, have long-term stock market returns in south-east Asia been so poor? Since 1993, when a flood of foreign money increased capitalisation in regional markets by around 2.5 times in one calendar year,37 dollar-denominated returns with dividends reinvested (what investors call ‘total’ returns) in every regional market have been lower than those in the mature markets of New York and London, and a fraction of those in other emerging markets in eastern Europe and Latin America.38

Economists at Standard & Poor’s Ratings Services are the authors of the straightforwardly titled “How Increasing Inequality is Dampening U.S. Economic Growth, and Possible Ways to Change the Tide.” The fact that S.&P., an apolitical organization that aims to produce reliable research for bond investors and others, is raising alarms about the risks that emerge from income inequality is a small but important sign of how a debate that has been largely confined to the academic world and left-of-center political circles is becoming more mainstream.

Immigrants also send billions of dollars in remittances to their home countries, promoting economic growth and development. Worldwide, they wired, mailed, or carried home $449 billion in 2010. (In 1980 remittances totaled just 37 billion.)11 Nowadays, remittances are more than five times larger than the world’s total foreign aid and larger than the annual total flow of foreign investment to poor countries. In short, workers who live outside their home country—and who are often very poor themselves—send more money to their country than foreign investors, and more than rich countries send as financial aid.12 Indeed, for many countries, remittances have become the biggest source of hard currency and, in effect, the largest sector of the economy, thereby transforming traditional economic and social structures as well as the business landscape.

We could cite many cases of companies’ similar attempts to create new-growth platforms after the core business had matured. They follow an all-too-similar pattern. When the core business approaches maturity and investors demand new growth, executives develop seemingly sensible strategies to generate it. Although they invest aggressively, their plans fail to create the needed growth fast enough; investors hammer the stock; management is sacked; and Wall Street rewards the new executive team for simply restoring the status quo ante: a profitable but low-growth core business.4

Groupon is a study of the hazards of pursuing scale and valuation at all costs. In 2010, Forbes called it the “fastest growing company ever” after its founders raised $135 million in funding, giving Groupon a valuation of more than $1 billion after just 17 months.5 The company turned down a $6 billion acquisition offer from Google and went public in 2011 with one of the biggest IPOs since Google’s in 2004.6 It was one of the original unicorns. However, the business model had serious problems. Groupon sometimes sold so many Daily Deals that participating businesses were overwhelmed . . . even crippled. Other businesses accused Groupon of strong-arming them to sign up for Daily Deals. Customers started to view the group discount (the company’s bread and butter) as a sign that a participating business was desperate. Businesses stopped signing up. Journalists suggested that Groupon was prioritizing customer acquisition over retention — growth over value — and that it had gone public before it had a solid, proven business model.7 Groupon is still a player, with just over $3 billion in annual revenue in 2015. But its stock has fallen from $26 a share to about $4 today, and it has withdrawn from many international markets. Also revealing is that the company is suing IBM for patent infringement, something that will not create customer value.8 Many promising startups have paid the price for rushing to scale. We can see clues to potential future failures in the recent “down rounds” (stock purchases priced at a lower valuation than those of previous investors) hitting companies like Foursquare, Gilt Group, Jet, Jawbone, and Technorati. In their rush to build scale, executives and founders search for shortcuts to sustainable, long-term revenue growth.