As we can see, the freelance track is not optimal. Not to mention that, in the end, we continue to work for very big bosses... who are this time called Google, Uber, Facebook, etc.
How then can we truly free ourselves from the bosses, that is to say, no longer work for them as an employee or as a service provider (freelance). The only solution is to be them. You have to own the company. The rat must become an experimenter.
Fighting the system is useless... the rat alone is powerless against the capitalist war machine. But he can use the strength of his opponent to achieve his ends, as an aikido champion would. Why bother when you can rely on the energy flow created by the consumer society?
Rather than working for it, let's make it work for us. To own the business, there are no two ways about it. You have to buy it. Of course you can't do that, well not all of it. But you can buy yourself a small slice of it. Then over time, you buy some more, and some more, and some more.
The rat then gradually turns into a mouse, the kind that stores up provisions in its house. You accumulate, a little Gruyere here, a little Emmental there. You never get to a full wheel, but your mousetrap fills up with lots of different varieties of cheese.
You never own a business, but you gradually own an increasing number of different securities.
Congratulations, you have become a capitalist. You are now the experimenter. You are still in the Rat Race, but you are the one who gives the starting signal, and above all you are the one who receives the finishing bonus.
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Well done, a great conclusion to this series of articles. If we can't change the whole system, we can actually use it wisely, transforming its imperfections into advantages.
I often use the following analogy: The capitalist system is like the stock market. It is not good or bad in itself, it simply exists and does not care about your existence; you have to go with it rather than trying to fight against it in vain; it is very efficient while being inefficient, and it is precisely this characteristic that allows you to use it to your advantage (e.g. by buying stocks after a correction).
Right! You have to go along with him in the long term, but in the short term when emotions take over you have to be tougher-headed than him.
That's clever, you made me want to buy Facebook, Alphabet and Amazon... heh heh
There may be a better choice… 🙂
Thank you for this series of articles. Indeed, owning a company - even partially - has advantages, but also has risks. Risk is part of life in general. But you have to be aware of the risk, analyze it, control it to a certain extent and accept it. When it comes to buying shares, this means that you should not buy lightly, but after a thorough study of the stock. I guess that the readers of dividendes.ch are all aware of this... Afterwards, we do not all have the same abilities to analyze a stock. For my part, even if I am neither a novice nor helpless in this area, I am aware of having shortcomings.
I would like to highlight another element that has been on my mind for a long time: the senior management and the board of directors of listed companies whose capital is dispersed (i.e. with a majority or very important shareholder). In listed companies whose capital is dispersed, power unfortunately largely escapes the owners - the shareholders - to the benefit of senior management and the board of directors. Often, senior management, who are ultimately just employees, and the board of directors (who in my opinion are also similar to employees in these circumstances) enrich themselves more than is reasonable (salaries, compensation, bonuses, stock options, etc.) to the detriment of the shareholders. They can do this because they hold the power and the knowledge. Even if in theory the shareholders, through the general meeting, are the ultimate power and can notably appoint and dismiss the board of directors, in practice they only endorse what the board of directors and senior management propose. With their power and independence, the board of directors and senior management, who have a common interest in paying themselves comfortably and not denouncing the abuses from which all benefit to one degree or another, do more or less what they please. In addition, senior management - perhaps also the board of directors - in this type of company often has a short-term interest (obtaining good results quickly, to justify high remuneration and increase bonuses, during the few years they are in office) which is opposed - in my opinion - to that of shareholder-investors who have a rather long-term horizon (but speculative shareholders can on the other hand very well accommodate themselves to the short term).
That said, it must be admitted that senior management, but also the board of directors to a certain extent, if they are good, are those who bring value to the company and therefore to the shareholders. It is therefore normal that they are well paid in the event of success. The whole question is to know where is the limit between well paid and overpaid. It is not an exact science. To assess, it is obviously necessary to take into account the company's results (and not only in the short term), but also the law of supply and demand for successful managers. Companies that do not align themselves with what the competition offers undoubtedly take the risk of depriving themselves of the best (even if the best are perhaps not always the most expensive), to the detriment of their results. So we must not be too stingy, but we must also not play the game of absurd overbidding which allows for remuneration out of all proportion to the added value provided. And above all, shareholders must regain control of this remuneration.
For my part, I rather see in a positive light the emergence of important external actors representing shareholders (often institutional shareholders) in general meetings, who monitor more closely and with more competence what the board of directors and senior management are doing. But these shareholder representatives are not only concerned with preserving the financial interests of shareholders.
I agree with you. Even if on paper and in the end it is the shareholders who have the supreme power, in practice, in the majority of cases, it is the top management who have full powers. The vast majority of the time, the shareholders are sheep. Nevertheless, the fact that they have the possibility of exercising their supreme power, even if they do not do so, is enough to generally put limits on these top managers. Shareholding is a bit like a nuclear weapon, it has a deterrent effect.
Warren Buffet attaches great importance to the choice of a company's management. The latter must behave responsibly towards shareholders, with a long-term perspective. For him, it is easy to appreciate this qualitative aspect because not only can he meet the managers but above all he can even sit on the boards. But for us, simple investors, it is very difficult to judge these men (and women). We can only judge their results (but that's already not bad). Benjamin Graham also said that judging management and their results was like giving the same rating twice for the same evaluation. I think the argument holds up...