Nothing Compounds Like Stocks

Do you know the feeling? You think long and deeply about something. It accompanies you into your dreams and is constantly in your subconscious. Then at some point, the realization dawns. For me recently, it was this: All the value in the world has been created through entrepreneurship.

By this I mean entrepreneurship in all its facets. It is about entrepreneurial thinking as the engine driving a wide range of discoveries. And entrepreneurship that creates demand for services and products. Only if profits are reinvested into entrepreneurship do they continue to grow. I am convinced: All value is only increased through entrepreneurship.

And how can I become part of it? With stocks. They offer us investors unparalleled opportunities.

Entrepreneurship in tradable units

Hasn’t gold been stable in value, and over very long periods at that? Yes, it actually holds its value better than money, as it cannot be multiplied indefinitely and doesn’t simply rust away. However, it is not a productive asset that creates anything. It is only ever worth as much as the next person is prepared to pay for it.

Real estate in a good location is productive and generates rental income. It holds its value, right? Absolutely, no argument there. But there is still one form of investment it cannot compete with.

With stocks! Because this entrepreneurship, cast in tradable units, bears children and grandchildren. And great-grandchildren. An important part of the economic success gets reinvested and bears new fruit. 

Real estate definitely can’t do that. If rental income is left in the property, it won’t grow into a new floor. The income can only be invested into something new. 

What remains at the end

Let's assume that half of the operating income of all stocks worldwide gets distributed. The rest then remains in the companies and enables further earnings growth. Over time, the good business models actually do grow another floor. 

We all know it: Share prices can rise and fall, short-term performance is unpredictable. But the longer the period, the clearer it becomes that one thing remains: the entrepreneurial return.