Investing, Fast & Slow

Dear Reader,

Welcome to The Benchmark!

You’re reading this because you joined the Navexa mailing list.

Which means you have, at the very least, a passing interest in investing, the markets, and building wealth.

Which means that — we hope — you’ll find this email informative and entertaining.

Here’s why:

Mission statement

‘An investment in knowledge pays the best interest,‘ as Benjamin Franklin said.

That statement sums up why we’ve launched this email.

Each week, we’ll write to you with stories, ideas and content that offers some insight and/or perspective to what’s happening in the markets and the wider investing world.

These will include (but not be limited to):

• Stories about the history of money, wealth and economics.
• Notes on current events moving markets.
• Interviews with our global network of HNW investors, traders, analysts and digital asset pioneers.
• Analysis & comparisons of investment strategies
• Answers to your questions

The Benchmark will not be making investment recommendations, nor providing financial advice.

Our aim is to provide investing knowledge that ‘pays interest’.

While this isn’t an investing email for beginners, necessarily, we should start with some basics.

And it doesn’t get much more basic than why we invest in the first place.

Check out this post:

The case for investing, in starkly simple terms.

If the idea that investing is essential to building real wealth, as Willy Woo so clearly shows, resonates, then this email is for you.

But, hang on a second.

Why The Benchmark?

This is why:

From 1965 to 2023, Warren Buffett has achieved an annualized return of 19.8%.

Compare that to the S&P 500 index, which has returned 10.2% a year.

Buffett has ‘beaten the benchmark’ by 9.6% for nearly six decades.

That might not sound like much to the average, short-term thinking, investor.

But let’s take a look at what that delta means in dollar terms.

The S&P 500’s 10.2% annualized return turns a $100,000 investment into just shy of $28 million.

Not bad right?

Most of us wouldn’t turn our noses up at that prospect.

But what about the Oracle of Omaha?

Well, the result of his 9.6% outperformance over those 58 years probably have something to do with the look on his face in this photo:

Warren ‘The Benchmark Beater’ Buffett

Because 19.8% a year, for 58 years, turns $100,000 into more than $3.5 billion.

Even with six decades of inflation accounted for, that’s still an exponentially larger sum than $28 million.

That 9.6% outperformance, over that timeframe, amounts to the $3.2 billion difference.

In other words, consistent long-term outperformance has exponential, real-money, consequences.

That’s why we invest in the first place.

It’s why we built the Navexa portfolio tracker.

And it’s why we’ve launched The Benchmark — to deliver ideas, stories and perspectives that will help you become a more effective and complete investor.

Quote of the week

‘Money does not buy you happiness, but lack of money certainly buys you misery.’ — Daniel Kahneman

The headline for this email comes from the late Daniel Kahneman, who died earlier this year. Daniel’s book, Thinking, Fast and Slow, released in 2011, was the culmination of a life spent exploring human decision making.

He won the Nobel memorial prize in economics in 2002 ‘for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty‘.

What now?

Next week, we’ll dive into the stock markets, exploring where they’ve been, where they’re at, and where they’re (possibly) going.

If you enjoyed this email and you’re looking forward to the next one, then be sure to whitelist us in your inbox, and, if you have a spare five seconds, send us a quick reply with any questions or comments you have for The Benchmark.

Invest in knowledge,

Thom
Editor, The Benchmark