The weekly digest — 23.10.24

A Winning Machine

What is more powerful than a 101-year-old winning machine? Since 1923, the S&P500 index has generated an annualised return of ~10.5%. For more than a century, it has:

• Beaten 99.9% of professional investors, who typically underperform the index annually by ~2-3%, with the gap widening dismally over time.

• Proven its stellar compounding potential; $1 invested in the index in 1923 would be worth more than $13,000 today.

• Comprised of the bluest of the world’s blue-chip stocks, self-regulating and re-weighting these in line with their individual performances — eliminating user selection error.

• Always regained its previous highs, surviving the Great Depression, one World War and the Covid pandemic.

Weekly Digest

On a look-through basis, we just became entitled to our next dividend from paint giant Sherwin-Williams. Founded in 1866, Sherwin-Williams is the world’s largest paint and coatings company with more than $23 billion in annual sales across 120 countries. To paint a clearer picture: the company’s privileged position generates gross margins of a whopping ~50 per cent. This figure has underpinned a superb dividend growth record. For 45 years and counting, Sherwin-Willliams has delivered consistent high annual dividend increases which have helped drive a 20-year stock price multiplication of an astounding 26x. The company’s critical point of difference? Its paint distribution system. Unlike other paint producers, Sherwin-Williams paint can be bought exclusively in its own outlets — numbering 4700 throughout the US. These cater to professional painters who can be certain that a Sherwin-Williams outlet will hold or make available all colours, in any volume, on demand, delivering quick and efficient service by a knowledgeable paint professional, with paint delivery vehicles available at job sites if needed. Plus, as paint jobs continue to shift away from DIY to professional painters, Sherwin-Williams stands to benefit enormously, parting the seas for its distribution system to intensify in parallel.

To Have and To Hold

The greatest threat to our investment success? Us. So, how do we get ourselves from outset to outcome? Over four years, we’ve collected more than four million data points that demonstrate how a particular methodological communication keeps investors on track. This email is part of a powerful anticipatory feedback loop that works as a bad-decision buffer. With our handholding, evidence shows investors are far more likely to hold onto their investments — long enough to enjoy their wins.