The most important secret of investing
Hi Friend š
If you grasp the most powerful concept in finance, youāll be better off than 99% of everyday investors.
This concept is so important that itās given this newsletter its nameā¦
ā¦ Compounding.
Some people call compounding a positive feedback loop or a snowball effect.
Einstein simply said itāsā¦
āThe eighth wonder of the world.ā
Compounding is so powerful because itās based on the law of exponential growth.
Most people fail to recognize the implications of exponential growth.
It isnāt surprising.
Exponential growth rarely happens in everyday life.
Trees grow linearly, babies become teenagers linearly, and we travel at linear speeds.
Evolution didnāt give us an intuitive sense of things behaving exponentially.
But in the world of financeā¦
ā¦ Exponential growth is the reason some people can retire comfortably while others can barely make ends meet.
Letās say Adam saves $1,000 a month and earns an average of 4% annually, compounded monthly across 20 years.
On top of the money heāll have saved at the end of that period ($240,000)ā¦
ā¦Compounding will have put an extra $126,774 in Adamās pocket.
A metric known as CAGR (compound annual growth) measures the exponential strength of an investment.
āā What is a good CAGR?
A CAGR of about 9% is considered to be strong.
And the best investors in the world? They can compound at 15% per year. This means you double your money every 5 years.
Letās assume Adam invests $1,000 each month at a CAGR of 15%.
In that case, heād make an extra $1.26 million on top of the money he saved after 20 years.
Again, no one can guarantee this rate of growth in the future.
It could be higherā¦ it could be lower.
Most importantly, remember that all investments carry risk.
But the key is toā¦
Take good, intelligent risk.
Thatās what my Compounding Quality Portfolio is all about.
All stocks in my portfolio have been vetted with my 7-factor CQ-method:
A wide moat: All companies in my portfolio are clear market leaders with strong pricing power.
High management integrity: Management has skin in the game. Their interests align with yours as an investor.
Low capital intensity: These companies require very little capital to maintain their current business and to achieve future growth.
Great capital allocation: Most of these companiesā cash is reinvested back into the growth of their businesses.
High profitability: The free cash flow margin of these companies is at least 15%.
Attractive historical growth: My portfolio positions managed to outperform the stock market for years and sometimes even decades in the past.
Secular trends: These stocks ride powerful trends. Think about themes like urbanization, AI, datacenters, semiconductors, or obesity. These sectors are only going to grow from here.
I believe in this method so much that ALL my investable assets are in this portfolio.
My success is your success. Itās all about having skin in the game.
How can you get access to my personal portfolio?
Access to my portfolio is reserved for Founding Partners.
The normal price to get in is $1,199.
Had you invested just $5,000 in my fully allocated portfolio, youād have increased your position by $1,350.
Your subscription wouldāve paid for itself within a year.
But I appreciate your continued support as a Compounding Quality reader.
Thatās why I want to give you a much better deal today.
Right now, you can become a Founding Partner for the price of a regular membership, which is usually $499.
And with Black Friday around the corner, thatās not the only discount youāll get.
Iām slashing an additional 20% off that price.
For a limited time, you can become a Founding Partner for just $399.
Hereās how it worksā¦
Just subscribe to the Annual Plan before Sunday and youāll be automatically upgraded to Founding Partner status.
The best part?
Youāll lock in this discount for as long as youāll stay subscribed.
For $399, hereās everything youāll get:
š My Personal Compounding Quality Portfolio full of quality stocks
āļø Three articles per week (Tuesdays, Thursdays & Sundays
š Full access to our entire library of data-driven articles
š Full investment cases about exciting companies
š Access to the Private Community
š„ Private Zoom meetings with the CEOs of the companies we own
Hereās how members like their Compounding Quality subscriptionā¦
I can almost guarantee youāll benefit greatly from becoming part of this community.
And most importantlyā¦
Youāll get the opportunity to take full advantage of the power of compounding.
Remember, compounding works exponentially.
The earlier you make your move, the bigger your investment can grow.
So head over to this page, subscribe to the Annual plan, and youāll be automatically upgraded to Founding Partner status.
This special discount is only available until Sunday.
So please, donāt miss out on this unique deal.
Everything In Life Compounds
Pieter
