Inaugural Letter to Investors
Dear Investors,
I have entitled this a “Letter to Investors,” but it is not to investors in any brand or business I run, but instead, investors in general. Although, in a rather profound way, you all do invest in me, giving me your time and attention. For that, I am forever grateful.
Investing is important. It is not just a silly game to play or an absent-minded hobby, though it does resemble both at times. Investing is a mindset. It is the answer to the question, “How do I become more?” You invest, of course.
We invest money in equities, time in our families, and effort in our careers. The great men and women of our time and of history found ways to generate returns on their investments that compounded over time. This ought be the goal of any investor.
This past weekend I helped put together some new furniture for my sister. Will either of us remember this in a year, much less ten? Probably not. However, I am convinced that I was investing my time effectively. That, along with other investments of time throughout the years has helped to build a great relationship. I cannot wait to see what another ten years of compounding does for us.
If we are to be investors, I propose that we should be optimist investors. For years, we have been taught to be wary of optimists. This is not all-together bad advice. As my dad often warned me, there are many people in this world who want you to wear rose-colored glasses when buying what they are selling. Whatever you do, you must not let greed overpower your senses, intellect, and instincts. I do not find that this precludes you from an optimist, however.
One of the things that I love about investing is the magic of the “what if?” It is amazing to think what some of the companies I am investigating today could become in five, ten, or twenty-plus years. Stories of great businesses inspire me. I feel lucky to have the opportunity to invest in some of the greatest organizations in the history of the world, and I am inspired by big potential.
In my view, it is best to be an optimist investor because you are not capping potential. When I am looking to invest whether in the stock market, relationships, or my career, I first allow myself to dream. Beginning with a dismal view of the future in mind often dissuades you from ever investing at all.
My method of optimist investing is simple: Dream, Challenge, Reflect.
First, we must dream big. I prefer to invest in companies that are shaping the world. This requires a big imagination. The founders of these companies have creative minds that endlessly push the boundaries of what is possible. To be an optimist investor, we must learn to dream like them.
Next, we must challenge and dissect the investment theses. Big dreams have one big problem. They are only dreams. It is hard to shape the world. Successful investments will weather tough times, significant competitors, and seemingly unsurmountable obstacles. To be optimist investors, we must learn to spot the quality companies that will thrive in challenging environments and have the strength to reject companies that fall short of our high standards. No matter how great the vision is, a company must have the fundamentals in place to succeed.
Finally, we must reflect. I am approaching four years as a stock market investor. Every single day I learn something new. Reflecting on previous decisions and investments will provide us with an unending stream of insights. To be good at reflection we must both document our thought processes in the moment and return to them in the coming months and years. By reflecting, we will get better at both dreaming big ideas and challenging the strength of investing theses.
Dreaming big opens our eyes to all that could be and increases our potential returns.
Challenging our ideas through research, counterarguments, and strict scrutiny will increase our rate of success.
Reflecting on our mistakes and victories will make us smarter, wiser investors.
Life is too short for prolonged sadness, and much too long for pessimism. At the end of the day, I have faith that humanity will continue to innovate. There is certainly much that could and should worry us about the world. However, I believe that each of us can continue to shape the world we live in and make it better for those who come after us. We may not reach all of the goals after which we strive, but who is to say that we will not? I prefer to cast a vote in favor of human ingenuity and resilience. I am an optimist.
Forever learning,
Ian Gray