Investment is to put money into an organization like "company" that can create more wealth continuously. We participate in the wealth creation and share the corresponding income. Among the various ways of participating in wealth creation, which one has the highest return?

A sports company on the verge of bankruptcy

In 1969, an American company called Blue Ribbon Sports encountered some problems. At that time, their main business was to help a Japanese company called Onitsuka Tiger to develop sports shoes. They act as their agent in North America to sell shoes. After five years of hard development, the company finally increased its annual sales from 8000 dollars to about 300000 dollars.

But for Blue Ribbon Sports, the company is on the verge of bankruptcy. Because their business model requires high cash flow. They need to place an order with cash to the Japanese company first, and then wait a long time until the shoes are sent across the sea, and take some time to sell these shoes to recover the payment. The bigger the business, the more money they need to pay in advance and tighter the company's cash flow.

Later the amount is large, it will be very difficult to borrow money. The owner wanted to sell 30% of the company's shares, which was about 300000 dollars at that time. For better finance, he even learned about various high-tech and electronic companies that had just emerged in northern California. He changed his company's name to Blue Ribbon Sports Technology.

Of course, this company did not go bankrupt and grew into the famous Nike later. If someone bought 30% of the company at that time, even after various dilutions, the $300000 will become more than $60 billion by 2020.

Buying stocks is buying companies.

In this small case, we learned about the two most common ways to participate in the distribution of corporate wealth - stock and debt.

For banks, one of their main tasks is to lend the money to various companies. Banks have become the "creditors" of enterprises.

Of course, we can also be the "creditors" of companies and buy corporate bonds. In this way, we can naturally charge a certain amount of interest as a return.

At the same time, we can also become shareholders or "owners" of companies by purchasing their shares. In this way, if the companies grow, we will share the wealth they create.

This is what many value investors often say: buying stocks is buying a part of the company's ownership.

This chart is a long-term income chart of American stocks, government bonds, gold, cash and other large categories of assets according to Jeremy Siegel, a professor of finance at Wharton School of Business at the University of Pennsylvania.

Not only the United States, but also many mainstream countries in the world have very high long-term stock returns.

The cornerstone of our investment system is that we believe that stocks or good companies will surely bring more than average returns in the long run.

（Writer：Haicy）