Gliding on the Waves of Value Creation
I picture a hawk gliding effortlessly, catching a thermal (rising warm air), and soaring to new heights. This is how birds conserve energy, using natural forces to ascend higher in the sky. Investing, especially in stocks, can feel much the same. By "investing," I mean owning shares of businesses listed on the stock exchange, making us part-owners. Birds find thermals, we find businesses, and we rise by owning them.
Let me explain.
A company is an organized economic entity that offers goods or services valuable enough for people to pay for. It provides jobs for employees while generating profits for the owners. This principle holds true whether it's a neighborhood lemonade stand or a global corporation operating in 100 countries.
At the heart of it is value creation. A business delivers something of value to customers, and its employees contribute their skills and talents to make it happen. Owners, in turn, are compensated because the capital they provide is essential for the business to operate—allowing it to acquire assets, hire staff, and pay for services.
While it may be difficult to invest in a local lemonade stand, larger businesses make their shares available to the public, raising funds for growth and expansion. Among the many companies listed on the stock exchange, a few stand out—these are the ones worth our attention.
These companies are like thermals, helping investors rise to new heights with seemingly minimal extra effort. But just as thermals are invisible to the untrained eye, identifying these promising companies requires skill and insight. The challenge lies in spotting these “thermals” and staying with them for as long as it pays off.
Investing in quality businesses with strong management and future potential is a straightforward idea, but it takes effort and discipline to execute. Some companies, through innovation or strategy, have a higher chance of delivering increasing value to more people. If we buy shares at a reasonable price—where we believe we’re getting more value than we’re paying for—we can potentially enjoy the ride as they grow. The key word here is value.
When it comes to stock investing, especially for families, diversification is important. We don’t need to rely on just one investment; we can hold a collection. Some will exceed our expectations, helping us build wealth over time, while others may disappoint, and we’ll part ways with them.
Like thermals, businesses don’t last forever. They may have two or three decades of strong growth before reaching a more mature phase. But just as thermals continuously form with the sun’s heat, human ingenuity will keep giving rise to new businesses that eventually list on the stock exchange. Our task is to spot them, invest, and hold them for as long as they deliver value.
Both thermals and businesses are unpredictable. That’s why investing can be rewarding but also humbling. The closest humans get to catching a thermal is in a glider—an engine-less aircraft that mimics birds, soaring on rising air currents and extending flight. Investing is like that—gliding on the waves of value creation.
The goal is to find those thermals and stay aloft for as long as possible. While birds and gliders must eventually land, capital, if invested wisely, can keep compounding indefinitely, rising to ever greater heights—and that’s when things get truly exciting!
Happy Investing!
Bogumil Baranowski
Disclosure:
Blue Infinitas Capital, LLC is a registered investment adviser. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.