4 ms·

There is a kind of middle ground. A few years ago I had a conversation with a friend that completely redefined investment versus speculation for me. This frie

There is a kind of middle ground. A few years ago I had a conversation with a friend that completely redefined investment versus speculation for me. This friend's grandfather had been a lettuce farmer in Monterey the 1930's. The value of the land rose significantly during his grandfather's lifetime. The grandfather had the good sense to set up a trust for his children. The trust has continually invested in other businesses over the years. My friend manages one of the businesses owned by the trust. Some of his sibling/cousins just get a draw from the trust. Some, like my friend, work for the trust and get both a salary and a draw. In the mind-blowing conversation I had with my friend, he told me about his plans for the upcoming weekend -- a combination family reunion, barbecue, and trust board meeting. Agenda: discuss the "cousins" -- that is to say, the kids of the next generation from age 7 to 17, thinking about which ones are likely to be in the "I'll just take my draw, thanks" group, and which would be likely candidates to be groomed for the next generation of trust management. At that point, it hit me like a ton of bricks: investment is when you expect your as-yet-unborn grandchildren to someday take over and operate the asset as a on-going business. Anything else is speculation. For me that illuminated a whole different way of thinking about business and investment.

josephjrobison 8y ago
Maybe influenced by Tywin from Game of Thrones after he talked a lot about legacy, but it seems wise and a fun thought process to think of your family in dynastic terms and planning for future generations. I think it’s a good way to stay grounded and towards harmony with family. Of course it’s not realistic if you’re not going to pass on wealth, but interesting to think about if that’s the goal. Also makes pursuit of $billion$ more altruistic as you’re planning for your dynasty, rather than just yourself.
supercanuck 8y ago
There was a whole Economist Article on this last month https://www.economist.com/leaders/2018/12/15/how-the-0001-invest https://www.economist.com/leaders/2018/12/15/how-the-0001-in...
kamaal 8y ago
Pretty much the House of Saud strategy, and may be the strategy of every powerful family there is out there. In the House of Saud case, its basically 'brother-stab-brother' process to become a king, the children nodes(cousins) in the tree generally get contracts to build airports, roads, or become police commissioner of some city. More powerful cousins get to become foreign ministers and run the economy etc. Cousins who fork off too far away from the branch, typically settle for pensions and may be get their kid's educations in some foreign university sponsored. But again these sort of cousins eventually are the last generation to receive these draws. Because if you let power slip, its basically over. In things like these, money follows power. Recently I heard of a similar case here in India. Where family politics had forked off a colleague too far away from the home branch. Or he would be pretty darn rich. Apparently his great grandad was a major feudal lord, his father settled for draws, the more powerful uncles have now pushed most other cousins out. And they and children pretty much keep every thing for themselves. Once you get to a non-trivial money to give away in inheritance, bringing order to family politics is another big thing to do. Political families in the Sub continent are another interesting thing. Every decade you see a powerful brother/cousin die. Only one survives. Then the game starts again between his kids :)

josephjrobison 8y ago

Maybe influenced by Tywin from Game of Thrones after he talked a lot about legacy, but it seems wise and a fun thought process to think of your family in dynastic terms and planning for future generations. I think it’s a good way to stay grounded and towards harmony with family. Of course it’s not realistic if you’re not going to pass on wealth, but interesting to think about if that’s the goal. Also makes pursuit of $billion$ more altruistic as you’re planning for your dynasty, rather than just yourself.

supercanuck 8y ago

There was a whole Economist Article on this last month https://www.economist.com/leaders/2018/12/15/how-the-0001-invest https://www.economist.com/leaders/2018/12/15/how-the-0001-in...

kamaal 8y ago

Pretty much the House of Saud strategy, and may be the strategy of every powerful family there is out there. In the House of Saud case, its basically 'brother-stab-brother' process to become a king, the children nodes(cousins) in the tree generally get contracts to build airports, roads, or become police commissioner of some city. More powerful cousins get to become foreign ministers and run the economy etc. Cousins who fork off too far away from the branch, typically settle for pensions and may be get their kid's educations in some foreign university sponsored. But again these sort of cousins eventually are the last generation to receive these draws. Because if you let power slip, its basically over. In things like these, money follows power. Recently I heard of a similar case here in India. Where family politics had forked off a colleague too far away from the home branch. Or he would be pretty darn rich. Apparently his great grandad was a major feudal lord, his father settled for draws, the more powerful uncles have now pushed most other cousins out. And they and children pretty much keep every thing for themselves. Once you get to a non-trivial money to give away in inheritance, bringing order to family politics is another big thing to do. Political families in the Sub continent are another interesting thing. Every decade you see a powerful brother/cousin die. Only one survives. Then the game starts again between his kids :)