The Future of Investing
What changes, and what remains the same...
Change is the only constant—that’s the motto of the Berenberg Bank, whose history dates back to the late 1500s. And if there is someone who knows a lot about change, it’s a long-lasting institution like them.
Lately, on the one hand, I’m learning from experts how A.I. is changing how investment research gets done. On the other, a historian (Professor Guido Alfani) who studies the super-rich tells me that money management has outlasted many other pursuits over the millennia. What’s the future of investing like then? What should we expect? — I wonder.
I remember it as if it were yesterday. I was in my mid-twenties, a newly minted junior employee of a Manhattan-based investment firm, armed with a cup of coffee, a bagel, and a fresh newspaper in my hand. As one of my early projects, I introduced my colleagues to a certain new research software. It wasn’t an easy feat! I ran into some resistance.
One senior executive took me aside and asked me what I could do with this invention that he couldn't with a pencil and legal pad when he was my age almost half a century earlier. I said nothing—but I could do it in a fraction of the time. I kept the job, and they made me a partner not long after that.
Since joining the profession two decades ago, I've seen a lot of change. I was fortunate enough to walk around the New York Stock Exchange when paper trade tickets were still in use; I kept one as a bookmark for many years. The trading floor was full of traders, not newscasters. Now, I know that I saw the end of an era.
Electronic trading and software have replaced paper tickets and legal pads, and the trading floor is a peaceful and quiet place compared to what it used to be—but what’s at the core of investing remains the same.
Three things haven’t changed and likely won’t: business ownership, human nature, and relationships.
Beyond all the noise, investing is all about owning businesses. They may come and go, emerge, grow, and fade away, but the essence and the goal are the same. We want to own businesses and benefit from their long-term value creation.
Human nature that drives fear and greed remains the same. The father of value investing, Warren Buffet’s mentor, Benjamin Graham, famously wrote in the book 1949 edition of The Intelligent Investor (I believe this quote didn’t make it to the later editions):
“Though business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains the same. Thus, the important and difficult part of sound investment, which hinges upon the investor’s own temperament and attitude, is not much affected by the passing years.”
Finally, people and relationships matter the most. Beyond the numbers and spreadsheets, investing is a people’s business. On the one hand, we have clients whose money we manage; on the other, we have the managements of the businesses we own. Also, we regularly rely on a deep and broad network of fellow investors and money experts, whose rich experience and knowledge is a tremendous asset.
All those years later --- I'm still among the first in line to try new apps, solutions, and software that can make my services better and my work more efficient, but as much as the tools change and evolve, companies come and go --- the heart of the matter remains the same. We want to own businesses, and we know that human nature is here to stay.
Relationships and people are of the greatest importance, though; they mattered a thousand years ago, and the odds are, they will in a thousand years.
That’s the future of investing as I see it.
Happy Investing!
Bogumil
Disclosure:
Blue Infinitas Capital, LLC is a registered investment adviser. 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.