Today’s episode is called GEICOs of the 21st century. The big idea I was trying to communicate to my investors at the time was that I was evolving from pursuing investments in “cheap” securities, to instead pursuing investments similar to GEICO when Ben Graham invested in it in 1948. Using Graham as an example was important, since my investor base was more traditional, value investor-minded. It’s also kind of ironic, of course, since Graham made more money from a “growth” investment than anything else he did put together. 

I dislike the labels “growth” and “value” because I think it’s a false dichotomy. To me, “value” just means buying something for less than it’s worth. The growth moniker just means that I’m willing to believe in the company’s future growth, and that growth is what allows me to buy it today for less than what it’ll be worth in the future.

The second reason why using Graham as an example is ironic is that Irving Kahn famously made a study of Graham’s returns and found out he would have underperformed the market if he hadn’t invested in Geico.

When I first published this letter—it came out in August 2018—it made the rounds on twitter, and was even quoted in a book. 

I think today—three years later—not only does it hold up well, but the framework set forth here remains as relevant as ever, as we look towards the next technology adoption curves: the metaverse, the entire universe of crypto assets, enterprise software, and more.

I hope you enjoy it.

A transcript of this episode is available here:
https://www.hellerhs.com/post/geicos-of-the-21st-century

Increasing Returns is a podcast by Heller House. We apply the principles of value investing to the industries of the future.

Increasing Returns is a podcast by Heller House. We apply the principles of value investing to the industries of the future.

Learn more about Heller House https://www.hellerhs.com

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