Last week, I started telling you how some insights led me to purchase three stocks that have done really well. Today, I tell you about another strategy I have.
Again, this is not advice. This is just me being transparent and showing you how my brain works. In a lot of ways, my belief system around investing has changed and this portfolio is a relic that points to past thinking. Most of these purchases were made years ago. The oldest, Google, I bought exactly 10 years ago today in its unusual IPO.
I’ll never be a CEO, CIO, VP, director or anything close to that. I’m glad, too. I have good friends who have ascended to those roles at their company and they bring home a hefty paycheck. However, nothing comes for free. A friend who was promoted to a director at a large retailer last year put in 80 hours a week for months on end. His two kids missed their father. I can’t live with the tradeoffs that I’d have to make to climb to a corporate leadership position.
There are lots of other things that I want to do with my life besides earn a paycheck. I’m thrilled that my ego doesn’t demand a position where I manage people or have a fancy title. I love programming. If I just wrote code for the rest of my working life, that would make me really happy.
Just because I won’t ever be a director or VP doesn’t mean that I don’t know a good leader when I see one. Today, I’ll tell you about some of the people in business who I admire most and what investments I’ve made as a result.
Surround yourself with the best people who will have you
You get to pick the people who surround you. Be wary of wasting time with bad people. They will drag you down with them. However, great people will take you places and make you a better person.
Similarly, putting your money behind great people can make you wealthy. Here are the investments I’ve purchased because of the company’s leadership:
- Apple (Steve Jobs): Jobs didn’t create, but redefined three product categories: music players (iPod), smart phones (iPhone) and tablet computers (iPad). Jobs was a visionary who stuck to his guns and didn’t care what others thought. He knew he was right and he usually was. I bought Apple stock when the iPhone was announced in January of 2007.
- Amazon (Jeff Bezos): Remember when Amazon just sold books? Now, it’s an open market for everything. Amazon also runs a pretty great cloud computing business for us programmers. Bezos’ mind is a decade into the future. Drone delivery? Amazon is one of the few companies in the world who could pull this off. And I think they will.
- Berkshire Hathaway (Warren Buffett/Charlie Munger): Buffett and Munger are the two most successful investors in history. So much has already been written about them, I can’t bring much new information to the table. However, I highly recommend you read Poor Charlie’s Almanack. It is out of this world.
- Chipotle (Steve Ells): Chipotle is the Apple of the restaurant business. They don’t have many products and grow slowly, instead choosing to focus on high quality and consistency. Chipotle is a 10 bagger for me and my 2nd best investment.
- Costco (Jim Sinegal [retired]): Sinegal always stated that the customer came first, then the employees and finally Wall Street. Right order I say! Focus on the company, not Wall Street.
- Facebook (Mark Zuckerberg): Facebook may very well be dead in 10 years or even 5, but I don’t think so. Like Bezos, Zuckerberg’s brain operates in the future. Oculus, a recent facebook purchase, will be a household name in 5 years and may surpass the business of facebook some day.
- Google (Larry Page, Sergey Brin): Remember when Google was just a search engine? Now, it has a world class email and maps service. Its phone operating system, Android, is by far the biggest in the world. However, I belive that the best is yet to come. Just look at the stuff they’re working on now; self-driving cars, microchipped contact lenses? Google is my best performing investment.
- Solar City and Tesla Motors (Elon Musk): The only thing more difficult than starting a car company is starting a rocket company. Elon Musk is currently doing both very successfully with Tesla* and SpaceX. Before that, he started PayPal. Musk is changing the world in very big ways.
*Accounting for stock splits.
**I should have 100 shares, but sold some a while ago. Big mistake.
Here are the qualities I think make a great leader:
- They don’t care about Wall Street: A good leader always puts the company and the product first. Make a great product and the money will follow. Once a leader starts talking about stuff like stock splits or buybacks, I know he or she is trying to appease Wall Street and I get nervous.
- They innovate: It’s not easy to keep a big, boring company going. It’s even more difficult when your business is changing constantly. Apple is the biggest company in the world and most of their profits come from a product that didn’t exist 8 years ago, the iPhone. I like to see leaders with big dreams who take big chances.
- They can pivot: Analysts said facebook was doomed and couldn’t make the move to mobile. Then, Zuckerberg proved them wrong and very successfully took the company to the small screen. A smart CEO isn’t afraid of making big changes when they see the wind starting to blow in a new direction.
- They are the founder: No one cares about your baby like you do. I’d rather have the founder running a business than a hired gun who can run the company into the ground and still reap $25,000,000 in severance.
- They are good people: Zuckerberg and Buffett have pledged to give their fortunes to charity. Both work to make the world a better place. I like leaders who I don’t have to worry about going to prison some day. This may not do much for the bottom line, but makes me feel better about supporting the company.
There are plenty of other great leaders. Alan Mulally (retired Ford CEO), Jack Dorsey (Twitter and Square) and Jack Welch (retired GE CEO) immediately come to mind. Henry Singleton of Teledyne was brilliant and one of the best ever. Who are your favorites? Let me know in the comments!
Thursday Rant: Me
I’m not done yet. You still don’t know what my biggest holding of all is. It’s not an index fund. I also have to tell you about my mistakes and why my portfolio is dangerous. Part 3 will take the form of a rant, with the crosshairs aimed directly at myself. Tune in next week on the 28th to hear the rest of the story.
*Plenty of people have stated that Tesla is highly overvalued for a car company. True, they are. However, Tesla’s real money making potential isn’t in cars, it’s producing batteries for other cars. Don’t ever bet against Elon Musk.
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