3/22/24 7:00 AM - Lesezeit

Nothing Compounds Like Stocks

Robert Karas

Chief Investment Officer, Partner

Do you know the feeling? You think long and deeply about something. It accompanies you into your dreams and is constantly in your subconscious. Then at some point, the realization dawns. For me recently, it was this: All the value in the world has been created through entrepreneurship.

By this I mean entrepreneurship in all its facets. It is about entrepreneurial thinking as the engine driving a wide range of discoveries. And entrepreneurship that creates demand for services and products. Only if profits are reinvested into entrepreneurship do they continue to grow. I am convinced: All value is only increased through entrepreneurship.

And how can I become part of it? With stocks. They offer us investors unparalleled opportunities.

Entrepreneurship in tradable units

Hasn’t gold been stable in value, and over very long periods at that? Yes, it actually holds its value better than money, as it cannot be multiplied indefinitely and doesn’t simply rust away. However, it is not a productive asset that creates anything. It is only ever worth as much as the next person is prepared to pay for it.

Real estate in a good location is productive and generates rental income. It holds its value, right? Absolutely, no argument there. But there is still one form of investment it cannot compete with.

With stocks! Because this entrepreneurship, cast in tradable units, bears children and grandchildren. And great-grandchildren. An important part of the economic success gets reinvested and bears new fruit. 

Real estate definitely can’t do that. If rental income is left in the property, it won’t grow into a new floor. The income can only be invested into something new. 

What remains at the end

Let's assume that half of the operating income of all stocks worldwide gets distributed. The rest then remains in the companies and enables further earnings growth. Over time, the good business models actually do grow another floor. 

We all know it: Share prices can rise and fall, short-term performance is unpredictable. But the longer the period, the clearer it becomes that one thing remains: the entrepreneurial return.

This is a marketing communication: Investment in financial instruments is subject to market risks. The tax treatment depends on the personal circumstances of the respective client and may be subject to future changes. Bank Gutmann AG expressly points out that this document is intended exclusively for personal use and for information purposes only. It may not be published, reproduced or passed on without the consent of Bank Gutmann AG. The content of this document is not based on the individual needs of individual investors (desired return, tax situation, risk tolerance, etc.), but is of a general nature and is based on the latest knowledge of the persons responsible for its preparation at the time of going to press. This document is neither an offer nor an invitation to make an offer to buy or sell securities. The information required for disclosure pursuant to Section 25 of the Austrian Media Act can be found at the following web address: https://www.gutmann.at/en/about-gutmann.

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