Investing for the long-term isn’t always exciting
When talking to a client about venture capital investment, and the excitement of being involved in the startup world, I was reminded of a story from Jon Krakauer’s book Eiger Dreams.
The scene is a smokey french bar in Chamonix, home to all extreme mountain sports. One favorite pastime is paragliding, which involves climbing to a high peak, jumping off with a parachute, and gliding down into the valley. Krakauer is hoping to brag about climbing a difficult route, the Capucin, to a french paragliding pilot named Patrick:
“The Capucin?” replies Patrick, clearly impressed. “That must have been a very difficult summit to launch the paraglider from, yes?”
No, no, I quickly interject–I simply climbed the peak; I didn’t mean to suggest that I’d also flown off it.
“Non?” says Patrick, momentarily taken aback. “Well, to solo the Capucin, that is a worthwhile undertaking all the same.”
Actually, I sheepishly explain, I hadn’t soloed the peak, either: I’d done it with a partner and a rope.
“You did not solo and you did not fly?” asks the Frenchman, incredulous. “Did you not find the experience a little–how do you say in English–banal?”
For some, the markets are little more than a casino: meme stocks, crypto, NFTs. A stock that returns 1,000% over 10 years sounds a little “banal” when someone is bragging about a 1,000% return in a month. Entertainment and having a story to tell at the cocktail party drive decisions on where to invest.
For others, the lure of alternatives is strong, something exclusive and a little secret: private investments like venture capital, private equity, real estate funds. These are legitimate investments, and some have great returns, but they require more complex structures and research to access. How much of the appeal is from the investment returns, and how much is from the exclusivity and networking?
Public markets – simple stocks and bonds – aren’t flashy, but the results are well documented. We find comfort in 100 years of market data and we find researching markets and helping clients grow their assets over time endlessly fascinating. Reaching the peak is exhilarating, even with a rope and a partner.