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Generalists make connections that specialists don't see
You succeed in investing the same way you succeed in life
You focus on the long game, you partner with highly trustworthy and competent people, accept that sometimes the tide will be with you and sometimes against you, and you try to keep yourself pointed in the right direction while swimming as well as you can.
It’s about having the right process and having resiliency. If you get these right, you’re destined to succeed.
The Pillars of Investment Success
In the 13th century, an Indian king wished to reward the inventor of chess. The inventor asked that a single grain of wheat be placed on the first chess square to be doubled on each subsequent square until all 64 squares were filled.
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A single grain! The king laughed at such a modest-sounding request, but he would soon come to appreciate that of the three pillars, contribution can be the least important.
Time is even more valuable than contribution when it comes to one's ultimate results. Recognizing this and making good use of one's time is the single greatest contribution an investor can make towards one's financial wellbeing.
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In 64 squares that single grain of wheat grew to a figure greater than all the wheat in the king's kingdom. Indeed, it exceeds even today's world production by orders of magnitude. All from just one grain and in just 64 squares.
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Note a subtle secondary lesson: the rewards really appear in the second half. You need a durable strategy that can succeed over a long time period.
Like time, returns are even more important than contribution over your investing lifetime. Achieving just a slightly higher lifetime return can result in multiples more in total gains.
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Of course, the 100% returns on the king's chessboard lead to mind boggling gains, but more realistic lifetime investment returns still demonstrate the transformative power of compound interest.
For example, assume an initial investment of $100,000 for 15 years:
a) at 10%, this grows to $418,000
b) at 12.5%, this grows to $585,000
c) at 15%, this grows to $814,000
As time increases, the impact of better returns accelerates
$100,000 for 20 years:
a) at 10%, this grows to $673,000
b) at 12.5%, this grows to $1,055,000
c) at 15%, this grows to $1,637,000
$100,000 for 25 years:
a) at 10%, this grows to $1,084,000
b) at 12.5%, this grows to $1,900,000
c) at 15%, this grows to $3,292,000
Time to $1,000,000 (10x):
a) at 10%, 25 years
b) at 12.5%, 20 years
c) at 15%, 17 years
You supply capital and time, and DL Capital will supply the highest possible lifetime returns using our performance value approach
What you add, we'll aim to multiply
A 13th Century King's Immensely Valuable Lesson
Contribution
Time
Returns
DL Capital is a value-oriented investment advisor that invests opportunistically in public equities
We aim to achieve the highest possible lifetime return by investing tax efficiently in superior businesses at distressed prices
We help investors better harness the remarkable power of compound interest
About
Dennis Lau, CFA
Managing Member
Dennis is managing member of DL Capital, and has served continuously as the sole investment officer since its founding in May 2005. Prior to launching DL Capital, he held roles in financial advisory and corporate finance, and ran an investment partnership, DCL Investments, LLC.
He holds the Chartered Financial Analyst® designation, and is a member of CFA Society New York. He also holds an A.B. from Harvard University in Economics where he focused on the subfields of capital markets, monetary & fiscal policy, and industrial organization.
His hobbies include golf, music, and fly fishing. Dennis also enjoys thoughtful discussion of myriad topics. He operates the company from Long Island, New York.
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