PERFORMANCE
If you’ve read any of Warren Buffett’s annual letters, you may agree some of the numbers are compelling. Take Berkshire Hathaway’s purchase of Coke for example. After completing its purchases in 1994, Berkshire received a cash dividend of $75 million. In 2022, that figure ballooned to $704 million. A holding like that, and banking dividends like those, should surely conjure a sunny and promising outlook and yet few investors will have enjoyed the view.
Why? Because the performance of a fund or a stock may diverge from each individual investor’s performance (due to behaviour and timing), you should be wary of conflating any such results with your own. A throne built of cans of Coke sounds enticing but relatively few shareholders would have enjoyed the taste of its stellar performance. More likely: most would have underperformed compared with Coke itself, due to ill-timed exits or an unfortified mind wearied by market oscillations.
Force500’s primary mission is to bridge the gap between historical performance, possible future performance and what an investor can realistically hope to achieve with Force500’s handholding. Each set of outcomes is not the same and attempting to extrapolate one result (yours) from another (for example the historical performance of a fund) will generate illusory results at best.
How can this be overcome? Force500 delivers easily absorbable, consistent and positive outcome-driven communications that bolster investor confidence and uplevel the likelihood of achieving a better outcome. Critical to this success is the Quantum of Solace; the key ingredient in our unique financial system, designed to provide investors with the minimum amount of wellbeing necessary for their relationship with their S&P500 holding to survive.
Without this requisite wellbeing, any investor is unlikely to withstand the peaks and troughs of an ever-fluctuating stock market; it will be near-impossible to enjoy the view. Buffett has famously said: “the stock market is designed to transfer money from the active to the patient.” That may hold true, but holding on to one’s investment in an environment that feeds on and encourages 24/7 activity is hard to do.
Force500 provides a framework of reinforcement with proven psychological precepts hardwired into its design to condition investors to fixate on their own progress, not the performance of others. These should not be conflated, and we hazard against inferring your own results on the basis of anyone else’s. Focus instead on the right conditioning; this will maximise the likelihood that investors will reconcile their time horizon with their objectives and correspondingly yield a better result.