And once you found them, don’t let go
There are two fundamental ideas that guide our process at Dock Street:
- Long-term business ownership is the primary wealth creation engine.
- The stock market offers investors the opportunity to partner with entrepreneurs and managers who focus on long-term business improvement.
The Forbes 400 list proves the first point. It is dominated by individuals who have owned all or part of a business for most of their working lives. They were willing to hang on to their businesses rather than sell out at an early stage.
Most of us are not entrepreneurs so we don’t have the advantage of Bill Gates, or Steve jobs or Jeff Bezos or Phil Knight. Which brings us to point 2: The stock market allows us to pick a number of successful business partners and tag along for the ride.
But what gets in the way of this wealth creation opportunity? Ignoring the “long-term” part of point 1.
The stock market makes it very tempting and easy to sell, short circuiting the long-term wealth creation process. The daily moves in stock prices attracts our attention away from the actual operations of the businesses we own. And worse, distracts us with political news, economic news, and any other story that moves the market in the short-term.
Understanding what is moving the market, or the economy, is a much harder task than understanding an individual business. Also, the gradual improvement of a business doesn’t inspire a catchy headline.
We will continue to work on understanding the businesses we own and the business partners who run them and share what we learn with clients.
Daniel A. Ogden