What Does Wealth Mean to You

A phrase that I've always loved...

"Beauty is in the eye of the beholder" can be attributed to Victorian-era author Margaret Wolfe Hungerford in her novel Molly Bawn.

But the concept of her quote is universal and timeless, originating long before Hungerford's book. From Ben Franklin in Poor Richard's Almanack to Jesus Christ in biblical verses in Matthew to the ancient Greek debates about the subjectivity of beauty, the concept is the same.

Said simply: People have different opinions of what is attractive.

The saying goes deeper than that. The phrase "the eyes are the window to the soul" is a close cousin.

People often think that the phrase means that your eyes are a window for other people to see into your soul.

But the original interpretation was that your eyes change how you see things yourself, reflecting your deep beliefs. Your eyes are windows into how you view and perceive the world, which has more to say about you and your soul.

If you see problems, sadness, and negative things everywhere you look, it may be time to reflect on yourself. It may be time to consider that you may be the source of your negativity.

On the flip side, seeing joy, opportunity, and positive things may reflect your own internal outlook. If you see countless opportunities to help people, make money, and put a smile on your face, it is probably a reflection of your motives and priorities rather than the world around you.

One ought to note that research has proven that optimists do live longer, healthier lives than pessimists.

What I'm saying isn't gospel. Of course, nature, nurture, and neighborhood have a massive impact on how you perceive the world and yourself within it.

But let's not fool ourselves. We all have preconceived notions that change the interpretation of what we see and how we see it. The question is how deliberate we are in determining those notions instead of letting others or our surroundings choose them for us.

Now, what does this have to do with investing and analyzing companies?

It all comes back to understanding wealth creation...

Return Driven Strategy is a framework, expressed as a pyramid, for analyzing businesses and understanding their wealth-creating abilities. On top of the pyramid sits the commitment tenet to maximize wealth ethically.

Maximizing wealth doesn't necessarily mean "make the most money possible"... It means "create the most value, as you'd define it." The definition of wealth, like beauty, is subjective to the person, business, or organization defining it.

And as Hungerford, Franklin, Jesus, and the Greeks all understood long ago, the source of that value will vary greatly depending on your point of view.

Wealth to some might purely mean monetary accumulation, though I would hope not!

Other ideas of wealth could be an ongoing love for travel and new experiences. You can imagine definitions, such as wealth from learning and knowledge, wealth from adrenaline and fun, or strong family relationships.

On that note, one's relationships, and the time and effort devoted to them, would be a very good way to define wealth. Strong relationships, particularly those begun earlier in life, strongly correlate with longer and healthier aging. We can thank George Vaillant's longitudinal study at Harvard University for that insight.

As we say time and again: The first wealth is health.

Before investing, think about what your kind of wealth looks like...

All of our work, and all of our efforts through life, culminate in some level of wealth creation.

Having a more specific and determined idea of how we define wealth will naturally dramatically increase our likelihood of achieving it.

That realization and determination of the beauty that you behold, of the wealth that you define, will change how you invest, your investment vehicles, and the timing of your strategies.

As any really good financial advisor will tell you, for your own investment and financial strategies to be optimal, you need a goal... That goal is your own very personal definition of wealth.

Making money and then investing it in the right stocks and bonds at the right times should help us to achieve financial wealth.

As the character Forrest Gump in that Oscar-winning movie says regarding his investment in Apple (AAPL) stock: "He got me invested in some kind of fruit company... [and] I got a call from him saying we didn’t have to worry about money anymore."

If you had invested just $100 in Apple when the Macintosh came out in 1984, you would have almost $24 million in shares today.

Forrest Gump found wealth that mattered to him – just as much as Apple – and invested in it.

Regards,

Joel Litman
October 1, 2021