I love the stock market. Buying stocks and dreaming up strategies is great fun. I live off trading. Best job in the world. I’ve been an active trader for 29 years. I’ve bet on growth stocks, distressed stocks, out of the money options, commodities, and shorted stocks. I did deep research on the oil sector, computer memory, tech trends, and other industry focused research. My long-term results are excellent, and I have lived off my investing for many years. I wrote a newsletter about stock picking, The Brass Letter, for nine years. Looking back over my newsletters and many notebooks full of research I come to one conclusion... “I made it all too hard”. One idea worked again and again. It is a simple idea that anyone could follow. Buy great companies run by the founder. Don’t over think it, buy the obvious names. Bet on Bill Gates, Steve Jobs, Jeff Bezos, Larry Page, Reed Hastings, Elon Musk, Mark Zuckerberg, and Jensen Huang. Buy these stocks slowly over time and hold for decades.

 

Let’s play with the idea. What would a good result look like? We hope to beat index investing. Over the last 30 years if you invested $1,000 each year into the S&P 500 total market index, which includes dividends, your $30,000 would have grown to $187,000. Not too bad.

 

Steve Jobs was fired from Apple in 1985. He moved on and built Pixar. He founded Next Computer in 1988. Apple bought Next in 1997 and Steve Jobs returned to the company he and Steve Wozniak started in a garage in 1976. In 1998 everyone who paid even a little attention to business knew that Steve Jobs had returned. Steve Jobs is back, and Apple is exciting again. If you put $1,000 into Apple stock in 1998 those shares are today worth $712,000. Wow!!!

 

What if you bought one founder growth stock each year? Buy a new name every year and hold. If you followed that strategy over the last 30 years and your 1998 buy was Apple and the other 29 years, you bought dogshit.com. You still crushed the market unless you trimmed Apple to buy more dogshit.com. The key was to buy and hold through good times and bad. The exciting idea is there is no way you bought 29 losers. I’m convinced that if you followed this strategy over last 30 years you would own most of the mega cap tech stocks: Microsoft (Bill Gates), Apple (Steve Jobs), Amazon (Jeff Bezos), Google (Larry Page), Meta (Mark Zuckerberg), Nvidia (Jensen Huang), and Tesla (Elon Musk). If every year over the last 30 you named a great founder CEO there is no way, you didn’t name most of the above list.

 

What could go wrong? Maybe I’m data mining. Humans are great at finding patterns. Great founder run stocks bought and held has worked great over the last 30 years but maybe it will fail miserably over the next 30 years. My premise is that it will work even better. The world has changed. Technology companies have become more important, and they change quickly. New founder run companies come along and change the world, creating an opportunity to make massive money. Nvidia is a great example. Nvidia is up 175 times in nine years. Incredible! Nvidia has grown from a niche video game company to an AI monster. Today Nvidia is worth two trillion dollars and only Microsoft and Apple are worth more. 

 

Before 1980 the largest companies changed very slowly. In 1930 the largest stock was AT&T and second was General Motors. Fifty years later in 1980 they were still number two and three with IBM the new number one. In recent decades change happens faster. Microsoft came out of nowhere to be the largest company in 2000. Apple, Amazon, Google, Facebook, Tesla, and Nvidia are all top ten companies, and all were started by a well-known founder. Over the next 30 years, technology companies will increase in importance and founder-run will win. 

 

How to play it? There are many different methods that could be used. I’m recommending a basic strategy that could supplement a traditional financial plan. Buy one name a year with enough money to matter but not so much that you will freak out if it goes poorly. Sticking with the plan is very important. Buying Amazon in 1999 was a good long-term bet but it didn’t feel that way in 2001. 

 

Below is the strategy I recommend to my kids. I call it, “Founder Growth for Life”. Buy one name a year and hold forever. Leave these stocks to your kids in your inheritance and encourage your kids to do the same for your grandkids. Obviously, you could sell these names if you need the money, but the goal should be to keep them for many decades. Best case scenario the strategy goes amazingly well and is a core asset that gives financial security. You can spend the dividends it will throw off. The $1,000 invested in Apple in 1998 is not only worth $712,000 today but also pays an annual $4,000 dividend. 

 

 

Scope: All growth stocks run by the founder. 

 

Buy: Purchase one stock each year. Pick a new name you have not bought before. Buy on the first trading day after your birthday.

 

Sell: Never.

 

Size: How much to buy depends on your situation. Purchase enough that it matters but not so much that you are easily frightened out. The recommendation I give to my kids is each year’s purchase should be the larger of the following: $1,000, 1% of your salary, or 1/200 your net worth.

 
A few closing bullet points: