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092: Versus “The Gathering Darkness”, Part 1 - Support Ownership of Great Businesses By Understanding Words and Meaning
Episode 9231st January 2024 • Mindful Money • Jonathan DeYoe
00:00:00 00:10:57

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In this heartening episode, I, Jonathan DeYoe, am thrilled to guide you on an eye-opening exploration of long-term investment, where we courageously confront the myths that have long clouded our financial judgment. This isn't just a lesson in diversification; it's a profound revelation in how you can become part-owner of the world's most successful companies.

We'll unravel the historical fallacies that have haunted investors for decades and reveal how to see past the media's sensationalism that often warps our wealth-building perspective. Together, we'll strip away the uncertainties and empower you with undeniable truths about the stock market, transforming your perception from viewing equities as mere financial instruments to recognizing them as your stake in the businesses that are shaping our world's future.

Join me in this transformative journey as we lay a new foundation for your investment beliefs and chart a path to enduring prosperity. I'm genuinely excited to share with you the invaluable insights and stories from various thought leaders that have shaped my understanding of the markets.

We'll delve into the compelling reasons why owning equities means so much more than just holding shares—it's about being intimately connected to the thriving pulse of global enterprise. My aim is to bolster your confidence, especially as we face the challenges of 'the gathering darkness', and to help you navigate the future with clarity and conviction.

By the end of this episode, you'll feel a renewed sense of ease and purpose in your investment strategy, armed with the knowledge that your financial future is backed by the rational, profit-seeking endeavors of the world's greatest companies.

So, don your captain's hat, and let's set sail into the vast and rewarding seas of global stock ownership. Your adventure towards financial enlightenment starts here, and I can't wait for you to join me.

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https://youtu.be/bEVqfA34-e8

Key Takeaways

(00:34) Minimizing Money Thoughts and Building Wealth

(07:53) Businesses' Rational Behavior in Turbulent Times

Tweetable Quotes

"Wealth is built through the ownership of great companies."
"The most important element of my belief in equities stems from a simple but often overlooked fact. Equities represent the ownership of businesses."
"Recognize that the entire structure of the businesses you own is designed to protect and grow your invested capital and breathe easier. Don't sweat the zig-zags as the clouds gather and therains begin."

Mindful Money Resources

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Transcripts

00:00 - Jonathan DeYoe (Host)

My goal as a goal focused, planning driven, long term investor is to buttress your beliefs. I wish to help you stand strong, especially as the gathering darkness attempts to tear those beliefs down. Now, as I said last week, wealth is built through the ownership of great companies. I want to make it easier for you to own them, easier for you to hold onto them. The most important element of my belief in equities stems from a simple but often overlooked fact.

00:30 - VO (Host)

Do you think money takes up more life space than it should? On this show, we discuss with and share stories from artists, authors, entrepreneurs and advisors about how they mindfully minimize the time and energy spent thinking about money. Join your host, Jonathan DeYoe, and learn how to put money in its place and get more out of life.

00:56 - Jonathan DeYoe (Host)

It's pretty great to get all that feedback from last week's Gathering Darkness, and so thank you for all those kind words For new and just returning listeners. Last week I presented a list of issues we're collectively facing with the phrase the gathering darkness, a phrase I've borrowed from my friend, coach and mentor, nick Murray. This week begins my project to help you hold on to your diversified portfolios of the great companies of the US and the world and maybe even increase your exposure to them, by overcoming through stories, history, facts and sort of simple and obvious beliefs, this gathering darkness. So this gathering darkness presents itself in the world today in the ways we described in the last session, and it could present itself in any way in the future myriad possibilities of an unknown and unknowable future. My goal as a goal, focused, planning, driven, long term investor is to buttress your beliefs. I wish to help you stand strong, especially as the gathering darkness attempts to tear those beliefs down. As I said last week, wealth is built through the ownership of great companies. I want to make it easier for you to own them, easier for you to hold on to them. The most important element of my belief in equities stems from a simple but often overlooked fact. Equities represent the ownership of businesses.

02:19

A whole generation of investors, the boomers, the children of the generation born around the Great Depression, were infected with a belief system. To them, the stock market was a thing to be loathed. It was the destroyer of economies, the slayer of wealth, the eliminator of jobs, the beginning of financial ruin for families. If you asked someone born around the time of the Great Depression about investing in stocks, they would tell you that you were insane to even consider it. Their children, my parents, learned this lesson at the knees of their grandparents before they were aware they were learning lessons at all. They drank the Kool-Aid and have passed this down generation after generation since. Occasionally, we even get a reminder of how bad things can be, in the form of a recession, or the Great Recession, or a dot-com collapse, or insert bear market here. None of them have ever been as bad as the Great Depression. In the meantime, the ownership of the great businesses in the US and the world has been the source of the vast majority of wealth created on the planet. This goes entirely unrecognized because of the combination of our negativity bias, a media that understands that negativity bias all too well. Bad news is good copy. If it bleeds, it leads. Today, the issue is compounded by our social media echo chambers.

03:44

Our challenge, the one I'm attempting to overcome with this nine-part series, is with generations of mistaken beliefs, not, as the data tells us, with reality. We use phrases like stocks, equities and shares to represent small slices of ownership in the great businesses of the US and the world, but in the hearing or reading, these things are not the same. Just try it out. When I say the stock market… Stop. What images and thoughts does that conjure for you? Then note the difference in imagery and thinking when you hear the phrase diverse ownership of great businesses.

04:29

It is true that we own stocks and equities and it is true that we own and enjoy the diverse ownership of great businesses. Why does it matter? So the popular perception is that a stock or the stock market doesn't or can't care about your invested capital. Even worse, I've heard lots of people suggest the gaping maw of the stock market is out to consume capital. The beliefs surrounding owning stocks or equities is that they are bad, risky, scary. But think of the other option.

05:02

Consider that you're the owner of a business. The business you own knows about the same risks you know about and is always making rational decisions to protect and grow its own and your capital. In fact, the business doesn't differentiate between the two. Its capital is your capital. When it protects its capital, it is protecting your capital. When it protects itself, it is protecting you. Mainstream publicly traded companies are rational, profit seeking businesses run by highly compensated management overseen by professional boards of directors for the benefit of shareholders. Both the management and the boards of directors' jobs are to protect and enhance shareholder value over time. We are owners. We are shareholders. The CEO works for us. If they embark upon a series of decisions that ends up hurting shareholders, hurting us, the board of directors is supposed to fire them and hire someone new who will do a better job serving our interests. Your investing resilience when things go other than expected is everything, and how you perceive the thing you own makes a huge difference in your resilience owning it.

06:18

If you think you're buying stocks, those little slips of paper with funny three and four letter symbols on them, whose value zigs and zags wildly and unpredictably on a daily basis in response to headlines and market statistics, then you're setting yourself up for excitement during lofty zigs and panic during ferocious zags. In this case, you feel like. You have to protect your own capital with no one more knowledgeable, no more knowledge or ability than anybody else, and the gathering darkness is going to become a reason for you to sell those funny cymbal slips of paper as you wait for the market to give you the elusive, all clear signal and buy back in again. This is a dumb way to do it. A it's more painful. B it doesn't work. No one can consistently predict the economy, the markets or the future relative performance of different investments. No one knows anything about the future.

07:12

However, if, instead, you appreciate that you're buying businesses that are acting rationally to increase their long term earnings, improve their cash positions, enhance their dividends, while responding rationally to price signals from 8 billion people in the world who wake up every day and make economic and financial decisions in their own best interests, you can ignore both the gathering darkness and the resultant market zigs and zags entirely. These are only neurotic popular responses to a market that always behaves like a drunk in the short term. They have nothing to do with the project of long term investing. In this case, the gathering darkness is just another instance of a long list of historical examples of gathering darknesses where the companies you own process, the darkness's opportunity. They innovated, they husbanded their your capital and went into action mode to grow. They increased market share, decreased production cost, enhanced quality, improved relationships with vendors and employees and, put simply, they improved their positions, going into the inevitable recovery.

08:23

You buy a stock. It goes down. You lost money. The one thing a rational profit seeking company will not do for any longer than it absolutely must is lose money. It will protect its revenue, it will protect its profits and it will protect its dividends. It seeks to protect its own, which is our capital. If you need a foothold amidst the gathering darkness, you couldn't find a better one than this.

08:52

If you're thinking of your ownership in the great businesses of the US and the world as stocks little slips of paper with funny three and four letter symbols on them that move erratically and unpredictably relative to news headlines stop thinking of it that way. Recognize that you own shares in the great companies of the US and the world. Recognize that the shares represent businesses. Recognize that businesses behave rationally. Recognize that the entire structure of the businesses you own is designed to protect and grow your invested capital and breathe easier. Don't sweat the zig-zags as the clouds gather and the rains begin.

09:29

Regardless of the specifics, the companies we own are working to protect us from permanent loss. It is literally in their job description. So I want to say thank you for joining me on this journey towards better understanding of ownership of the great companies of the US and the world and greater commitment to owning them, regardless of the current headlines, because I know that you don't believe me yet. Why would you? We're just getting started Next week. I'm going to remind you of a prior episode of the Gathering Darkness in all of its gory details. It was truly a horrible moment in our history but nonetheless proved meaningless to markets and economies in the long run. So I hope you're going to join us and I look forward to seeing you then.

10:19 - VO (Host)

Thanks for listening. Full show notes for each episode, which includes a summary, key takeaways, quotes and any resources mentioned are available at Mindful Money. Be sure to follow and subscribe wherever you listen to your favorite podcasts and if you're enjoying the content and getting value from these episodes, please leave us a rating and review at ratethispodcastcom forward slash mindful money. We'll be sure to read those out on future episodes.

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