An Open Letter to the Dutch East India Company

In 1602, a small group named the Dutch East India Company had an idea. In order to buy and ship goods like spices and silk around the world, they needed expensive ships and crews to man them. So they asked a bunch of private citizens to give them money in exchange for pieces of paper that entitled the citizens to a fraction of the profits from their trading operation. They used the money to build better, faster ships and hire more skilled crews, making the citizens even wealthier in the process. The first public company, and thus, the stock market, was born.

I want to personally thank the Dutch East India Company in a completely unnecessary but sincere way. Because what other institution in the world compares to the stock market?

The stock market allows everyone from a school bus driver, to a corporate lawyer, to me sitting on my couch in sweatpants to buy and sell pieces of the biggest, baddest companies in the world. Not many people fully grasp the magnitude of that. My resume can (and does) truthfully say that I’m a co-owner of Microsoft, AirBnB, and Tesla.

The stock market is what helps my grandmother, who retired in 2004, continue withdrawing 1% of her portfolio in the form of cash once a quarter so that she can keep buying soup, knitting needles, and birthday cards. Not to mention the 25 dollars I get in the mail every year like clockwork from her blessed soul.

The stock market doesn’t care if you’re a 16-year-old on Robinhood or a 60-year-old hedge fund manager. You can both buy one share of Apple at the same price ($140 as of the closing bell) and earn 1 dollar every three months you hold it in the form of a cash dividend. Then when you buy a new pair of AirPods, you are literally paying yourself (a fraction of a penny, but still!).

In the short term, it can be a circus. But in the long-term, it’s a weighing machine where every bad trend reverts to the mean and sanity prevails. SPACs, overvalued tech IPOs, and cryptocurrency charlatans have recently disappeared as quickly as they came.

The destructive winds of wars, pandemics, subprime mortgages, recessions, terrorist attacks, energy shortages, and megalomaniac electric car company founders only seem to make it stronger. If the stock market were a Dungeons and Dragons character, it would be chaotic neutral with a knack for rolling natural 20s in the face of adversity.

It’s the only place I know where the longer you stay, the wealthier you become. I can’t say the same for Target, the strip club, or any of my trips to a casino. It’s one giant real-time measurement of the world’s hopes and dreams, opinions, emotions, and predictions.

Fortunes are made and lost every single day around the world. Doesn’t matter if it’s the Dow Jones in Manhattan, the FTSE in London, or the Nikkei in Japan. Anyone can try their hand at outsmarting the “madness of the crowds”. Plenty do try. Few succeed for any meaningful period of time.

In fact, you could spend a lifetime studying the technicals, fundamentals, and macroeconomic headlines that most people think cause the ups and downs, and you’d barely scratch the surface. Study psychology, technology, and history instead, and you might fare a little better, but not much. By the time you become an expert in it, “it” has changed.

Even if you think you don’t care about it, you probably do.

Maybe you invest in your 401(k) at work just to get the company match. You’re actually buying time in the future to play with your grandkids with every cent you forego in today’s paycheck. It’s hard to find another place that sells time to you for pennies on the dollar.

Maybe you work at Home Depot. Well, if enough people get told housing prices are going to fall, they start to believe it, so they hold off on buying. This self-fulfilling prophecy becomes a reality, and then Home Depot’s shareholders start to demand cost-cutting measures to reduce OPEX. Your $25/hour job just disappeared, along with all the lumber memes of 2021.

Maybe you think capitalism is simply the worst thing to happen to this planet (and it is, besides all the other economic systems out there, of course). But consider the flywheel of ideas, products, and services that are funded, researched, created, and brought to market thanks to investing. Whatever device you’re reading this on, whatever life-saving medication was just prescribed to an otherwise dying person, whatever eventually reverses climate change has been and will be a product of an optimistic entrepreneur with an idea in need of funding and a place to get it.

I’m not saying it’s perfect or fair. It’s sad that cash savers are punished by inflation eating away at their purchasing power. I’m also aware that not everyone is knowledgeable about money. I’m lucky to have a natural interest in investing, but I hope this helps other people get excited about it, too.

Because betting against the stock market is betting against human ingenuity and prosperity. You’d be betting against the long upward arc of progress. Against the smartest people around the world at the best companies working like hell to make things better, cheaper, and faster for your convenience and for their own self-interest. I might not do well at blackjack, but even I wouldn’t take those odds.

This is my thanks to the most entertaining, complex, and fascinating place in the world and the company that started it all.

(Not shown: the absolute insanity of the 2020-2022 market)

Subscribe for new posts delivered direct to your inbox:

More reading:

How to Save Money while Saving Energy

I think about saving money like a bird thinks about flying. Which I assume is never and also all the time. So, these days, when it comes to saving money, I like to think about the amount of energy or materials that are saved in addition to the money itself.

Comments are closed.