The weekly digest — 25.09.24

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 recently became entitled to our dividend from The Coca-Cola Company. Coca-Cola has been a dividend champion, steadily increasing its dividend for 62 years and driving superb stock price appreciation in parallel. How so? Take WWII for example, when Coca-Cola set its sights on global penetration. The company determined to arm American forces with an endless supply of Coke wherever they were in the world, entrenching the beverage within the international consciousness. As Coke evolved, it extrapolated two key insights that accelerated the business. First, that the fierce protection of Coke’s ‘secret formula’ was essential to the brand and second, that the business could be effectively split into the syrup business — which remains one of the best-ever businesses — and the distribution business, for which Coke provides rights to independent or semi-independent businesses to bottle and distribute the product. With this wonderful model in place, Coke’s lustre eventually enticed Warren Buffett, who announced a 10 per cent purchase stake in 1989 — completed in 1994 — that he intended to hold forever.

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.