The secret to successful long-term investing is really quite simple. It doesn't require you to check every line of a balance sheet. It doesn't involve comparing valuation ratios or growth metrics. You don't have to learn technical analysis and chart patterns. It has nothing to do with branding, or having a moat, or efficient supply-chain logistics. The one key to successful, long-term, build-huge-wealth-that-you-can-hand-on-to-your-grandkids kind of investing is this:
FIND A GENIUS CEO and INVEST IN HIM OR HER EARLY
The greatest long-term investments are made in people, not companies. Find a creative genius with a passion for solving the world's problems through ingenuity and hard work, and once they go public, buy shares. Hold them for as long as the genius is CEO. Sell when they quit or die (unless another genius takes over).
Think of Larry Ellison, the genius at the helm of Oracle from its inception. If you had bought $10,000 of ORCL stock on its IPO day (March, 1986), today it would be worth $7.3 million!
Think of Steve Jobs, founder of Apple. A $10,000 stake in AAPL on the day of its IPO (December, 1980) is today worth $3.2 million!
Bill Gates and Microsoft? $6.4 million!
Jeff Bezos and Amazon? $2.7 million!
There are more recent examples. Like Zuckerberg at Facebook which is now nearly a 3-bagger since its May, 2014, debut. And think of how your $10,000 would now be $160,000 had you invested in visionary chef, Steve Ellis, when Chipotle went public back in 2006.
I personally think Elan Musk is one such visionary-genius worth investing in for the long run. His public company, Tesla, which makes electric cars (and soon, utility-strength batteries for home power generation) is a case study in the marriage of quality design, forward-thinking innovation, and excellence in production value. The company has struggled some in recent months due to supply chain problems (they can't make the cars fast enough to keep up with demand). Still, had you put $10k into the IPO on day one (June 29, 2010), you'd be sitting on $116,000 today less than 5 years later. And if that rate holds, twenty years from now you'll have...well...a lot of money.
Musk is a South African-Canadian-American with a passion for space exploration, renewable energy, and fast trains. He is co-founder of Paypal, CEO of Solar City (SCTY), and founder-president of privately held SpaceX. Musk's education is in Physics (UPenn) and Business (Wharton), and he developed his passion for outer space by reading Isaac Asimov. Musk designed the two Tesla models himself, and he has complete designs for a bullet train system called the "Hyperloop" that runs on...get this...vacuum tubes. A few days ago SpaceX conducted experiments that could one day revolutionize the way we travel in space.
It's just this kind of wide-ranging, energetic, we-can-do-the-impossible CEO that I want to invest in. I also love the fact that everything Musk is working on now harnesses the power of technology to improve human living conditions. Electric cars, solar power, cost effective space travel, magnet trains zipping at 600 mph...all are projects that aim at improving living conditions here on earth.
I look at "investing" in a company as "vesting" myself (clothing myself) in the culture of the company. The last thing I want to "wear" is a company that is hurting people through harmful foods, or addictive behaviors, or any kind of exploitation. Companies like TSLA and SCTY are, in my opinion, worth vesting in.
Today Musk leaked to the press that Tesla will begin production of a battery-powered generator for homes, news that ended speculation that the mysterious new product was an electric motorcycle. Investors love the idea and have bid up shares of TSLA 5% today. Both TSLA and SCTY are trading well below their annual highs here, and both are showing nice momentum off the lows. I'm long both and plan to hold them (especially TSLA) long-term.