We all play a role in the economy and some are near the top and some are near the bottom all for a multiple reasons that can be rationalized. The ideal for the average person is to be in the middle with enough assets to go through the cycles of the economy and still be okay. At the top, there are very wealthy people and one way they achieved the wealth is hedge funds and private equity. There are many different paths, but any path which allows for money to be made is legal will draw many people to see if they can capitalize on the opportunities. There are risks and rewards in doing so, and for a glimpse of what it is like there are books to be read. One such book is called Private Equity, a Memoir by Carrie Sun, published by Penguin Press, NY, 2024.

The author’s job was to be the assistant to the firm’s billionaire founder. Working for a profitable firm is both stressful and full of perks and reasonably high pay. The events in the book are true, but the names are fictional. The author liked working for the firm, but the stress of maintaining expectations and always been ready to ensure her bosses had the necessary documents for meetings was relenting.

Similar to sports, the key is investing is not to win once but consistently overtime and that is easier said than done. The reason is once you are successful, every other firm will examine what did you do and how did you do it? what is the secret sauce? Conferences often have successful sport coaches talking about how they remained consistent for their careers.

The secret is simple. The first is compounding. Stay in the market as much as possible. Have it invested it. Wait out any panic and let it ride. let it grow. It is easier to do the richer you are.

In a crisis, the wealthy have the ability to keep buying or buy assets when they are inexpensive. Then wait till the world returns to a new normal and the asset prices rise. (When President Trump imposed tariffs on the world and stock markets went down, did you sell? hold? or buy? It took a month before some form of normalcy came back, but it did come back, and the stock market rose in value).

Access. If you have money, people will want a piece of it and bring all kinds of deals to you. The ability to say no is very important, but somewhere in all those deals can be the next big thing. Somewhere in the normal life cycle of companies will be the high growth phase, the hedge funds have tapped into this economic lifecycle. Once the companies have proven themselves, then they go public for the insiders to cash out some of their holdings, but at higher prices. Retail investors can get in, but companies used to go public at lower prices or what was known as penny stocks, now not so much.

Linking to dividend paying stocks, investing in profitable stocks which pay a dividend is using compounding and over time both the dividend payments and profitable companies tend to trade at higher multiples than non-profitable companies, means you will be richer. It all depends on how fast you wish to get there. As your assets grow, you will have options what to do with the money and having those types of options is a very good thing to have.

There are more questions than answers, till the next time – to raising questions.