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Tuesday 26 August 2014
Tuesday 26 August 2014
Tuesday 26 August 2014
Tuesday 26 August 2014
Bridging the Past with the Present
Other than their immense utility and the lasting value they have brought to local, national, and global economies, these engineering marvels share one striking feature: in the short term, they were enormous money pits.
Isambard Kingdom Brunel, the visionary behind the Clifton Suspension Bridge spanning Clifton Gorge near Bristol, passed away before the bridge’s completion, and it took decades before the project recouped its costs.
Similarly, the Marquis of Bute poured millions into developing Cardiff’s docks, creating the world’s largest coal port. Like Brunel, he did not live to see a return on his investment.
The Spirit of Patience
The Victorian-era ethos of long-term investment seems to have faded in some quarters. Entrepreneur Luke Johnson, known for successes like Pizza Express and Patisserie Valerie, has argued for a return to "patient" capital. Speaking at a Quoted Companies Alliance gathering, Johnson criticised hedge funds for their short-termism, claiming that investments held for mere months hardly qualify as true investments.
The Case for Long-Term Investment
Johnson believes that patient investors, who are willing to accept losses or modest returns in the short term while a business matures, are key to sustainable economic growth. By taking a long-term view, investors help businesses survive and thrive, fostering greater stability and innovation.
He advocates for companies to become PLCs and sell shares to the public rather than relying on private equity deals, which often prioritise quick profits over lasting growth.
Opportunities for Small Investors
For small investors, Johnson recommends looking beyond high-profile public offerings like Royal Mail or the AA. Investing in smaller, growing businesses may seem riskier but offers the potential for significant rewards. Diversifying through funds that support a mix of startups and established businesses can help spread risk and balance a portfolio.
Investing for Growth and Society
As with any investment, there are no guarantees. However, businesses with long-term growth potential are valuable not only for their financial returns but also for their broader contributions to society.
Short-term gains might appeal to some funds, but Johnson warns that this mindset stifles the kind of growth that generates jobs, supports public finances, and strengthens the social fabric.
The Social Dividend
Ultimately, there is another kind of investment every shareholder can make: an investment in the society around them. By embracing long-termism, investors can support sustainable business growth, contribute to the economy, and build a better future. It’s an approach that benefits not only the individual but society as a whole—and one that is almost certain to pay dividends over time.
Bridging the Past with the Present
Other than their immense utility and the lasting value they have brought to local, national, and global economies, these engineering marvels share one striking feature: in the short term, they were enormous money pits.
Isambard Kingdom Brunel, the visionary behind the Clifton Suspension Bridge spanning Clifton Gorge near Bristol, passed away before the bridge’s completion, and it took decades before the project recouped its costs.
Similarly, the Marquis of Bute poured millions into developing Cardiff’s docks, creating the world’s largest coal port. Like Brunel, he did not live to see a return on his investment.
The Spirit of Patience
The Victorian-era ethos of long-term investment seems to have faded in some quarters. Entrepreneur Luke Johnson, known for successes like Pizza Express and Patisserie Valerie, has argued for a return to "patient" capital. Speaking at a Quoted Companies Alliance gathering, Johnson criticised hedge funds for their short-termism, claiming that investments held for mere months hardly qualify as true investments.
The Case for Long-Term Investment
Johnson believes that patient investors, who are willing to accept losses or modest returns in the short term while a business matures, are key to sustainable economic growth. By taking a long-term view, investors help businesses survive and thrive, fostering greater stability and innovation.
He advocates for companies to become PLCs and sell shares to the public rather than relying on private equity deals, which often prioritise quick profits over lasting growth.
Opportunities for Small Investors
For small investors, Johnson recommends looking beyond high-profile public offerings like Royal Mail or the AA. Investing in smaller, growing businesses may seem riskier but offers the potential for significant rewards. Diversifying through funds that support a mix of startups and established businesses can help spread risk and balance a portfolio.
Investing for Growth and Society
As with any investment, there are no guarantees. However, businesses with long-term growth potential are valuable not only for their financial returns but also for their broader contributions to society.
Short-term gains might appeal to some funds, but Johnson warns that this mindset stifles the kind of growth that generates jobs, supports public finances, and strengthens the social fabric.
The Social Dividend
Ultimately, there is another kind of investment every shareholder can make: an investment in the society around them. By embracing long-termism, investors can support sustainable business growth, contribute to the economy, and build a better future. It’s an approach that benefits not only the individual but society as a whole—and one that is almost certain to pay dividends over time.
