Current Dynasty Members: feel free to ignore if you receive this email.
To be quite honest, I hate sales. It feels like a waste of time. People either want what you're selling or they don't. Like Bezos says, "Advertising is the price you pay for having an unremarkable product or service."
But I recently changed my mind while listening to a young CEO named Henry Schuck. He made the point that if you have a product or service that you really believe in, shame on you for not telling people about it. If it truly delivers value to people, not "selling" is actually withholding something good and therefore, shameful. The forcefulness of the language poured cold water on my sleepy view of sales.
With that said, here's my sales pitch for Investing City's Dynasty Membership.
The Dynasty Membership is our flagship service while Business Breakdowns is our entry-level one. Not only is Business Breakdowns bundled in with the Dynasty Membership, that's just the tip of the iceberg.
The core of the Dynasty Membership is set around 2 things – full transparency and community.
We send out real-time trade alerts for every decision we make in the portfolio. And this real-money portfolio (nearly all of my net worth) is posted on our site with the exact allocations of each stock that I own.
Why should you care? Well, here's our track record for the past 5 years. That's over a 10-bagger – on the entire portfolio.
But here's the thing. Signing up for the Dynasty Membership just because of that chart is dangerous. Sure, it's a tiny piece of evidence that we may know a little bit but there will inevitably be periods of extreme volatility (read: underperformance). So that's why it's more important to understand our philosophy to see if it makes sense to you and aligns with your risk tolerance and goals.
Below is a recent email we sent to Dynasty Members that details our strategy:
I often get the question, “do you only invest in tech?” The answer is a big, fat no. I try to invest in the companies where the underlying earnings power is growing the fastest. If stock prices follow earnings, it makes sense to me that if you want to compound at a high rate, you need to find companies that are growing their cash flows as fast as possible. Tech just happens to be the place where a lot of companies are doing that (also the word "tech" is kinda superfluous. Railroads were high-tech at one point).
Now, in theory, investing this way may sound easy but there are a few caveats.
One, fast-growing companies attract competition. Therefore, I try to find clear leaders that are dominating so this risk is minimized as much as possible. If it’s obvious that a portfolio company is slowing down due to competition, I will likely move onto greener pastures. It’s nothing personal. Stocks don’t know we own them.
Two, fast-growing companies often go for very high valuations. This is extremely uncomfortable because:
a) it’s tough to cognitively get around the fact that you are overpaying in the short term and
b) the stock prices can be wildly volatile (I don’t need to prove that to you, the last few months is enough evidence).
Three, fast-growing companies can be riskier. My definition of risk isn’t volatility. Volatility should actually be defined as opportunity. Instead, risk is when you permanently lose money. That’s what we’re really talking about. When a company is doubling its revenue, things can break. It’s tough to rapidly scale and sometimes the company culture can get out-of-whack, the CEO can burnout, employees can get complacent with fat options packages, etc. That’s why I follow company culture so closely. I figure that if the culture is still top-notch, things probably aren’t breaking down permanently.
So to recap:
I want to compound money as fast as possible (AFAP – I don’t think this will catch on lol) so I find companies that are growing their underlying earnings power as fast as possible. However, these companies can attract a lot of competition, their valuations can be too high and the culture can break while rapidly scaling. To limit the risk of these factors, I study competition in-depth, constantly test the assumptions in the stock price and keep a pulse on the company culture. It’s not a perfect science, but that’s my broad strategy. It has nothing to do with a top-down view of the world, though that often helps identify where to fish for fast-growing companies. It also has nothing to do with paying low or high multiples. It’s about conviction and upside. It also has nothing to do with SaaS or tech. It just so happens that there are some fantastic, fast-growing SaaS companies. And lastly, it has nothing to do with small or large cap. Typically, you won’t find a $500 billion company growing 50% (though it’s quite possible) so I tend to try to find smaller companies, even micro-caps if they fit the criteria. It’s not about boxing ourselves into a sector or company size, it’s about finding companies that will compound the fastest.
Besides laying out the portfolio strategy, the purpose of this post is to remind myself about not getting complacent. It’s important to keep testing the assumptions and finding better companies with more upside. It’s not easy but that’s why it can be rewarding. As Charlie Munger says, “anything who thinks investing is easy, is stupid.” I could not agree more.
Every week, you'll get an update on what's happening in the portfolio, especially if any earnings were reported or if new products were released. I think the best way to describe the value-add of the service is that I'm working full-time, for you, to offer up the best risk/reward scenarios that I can. But my money's where my mouth is. The Transparent Portfolio is not just a model portfolio, it's fully aligned with members.
The other thing that the Dynasty Membership centers around is community. It comes in the form of a Dynasty-only Slack group of nearly 200 investors. There is a constant flow of articles, insights and new companies profiled. Think of it like Fintwit without all of the noise.
I'd like to be mindful of your time so I'll end things here. If you've read this far, I feel like it's a tease to not list the price – it's $59/month to become a Dynasty Member.
If you're interested in the Dynasty Membership, you can sign up [HERE]. Or, feel free to just reply to this email and I can personally sign you up.
One last thing – we promise to do our very best to help you save time and boost your returns. It would be our privilege and honor.
All the best,
Ryan Reeves (founder of Investing City)