The weekly digest — 25.12.24

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 received our quarterly dividend from RTX earlier this month. The company, established in 2020, was formed via a merger between United Technologies and Raytheon. Comprised of Collins Aerospace, Pratt & Whitney, as well as Raytheon, RTX is one of the world’s foremost leaders in the aerospace, aviation and defence sectors — generating approximately $80 billion in 2024 sales alone. Some more number crunching: every second, an aircraft powered by a Pratt & Whitney engine takes off and lands; while every day, 11 million passengers are moved on an aircraft with RTX content. Meanwhile, in defence, it is estimated that approximately half of the world’s population is protected by RTX systems, including the largest ever order to support the European Sky Shield Initiative. How else is the company favourably positioned to extend its 30-year record of dividend growth? A series of factors: in light of an apparently insatiable quest for deference systems that are routinely upgraded and optimised, and against the backdrop of a post-Covid uptick in passenger flights, it bodes especially well than more than 85,000 installed engines supply high and predictable servicing for up to 30 years.

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.