During strong market times like we experienced in 2024, or times of uncertainty, are you inclined to be more like a tortoise or a hare? As we begin another year, it’s a perspective worth remembering: meaningful growth is often measured over decades, not months or even years.

In the excitement of the bull market’s run in 2024, Warren Buffett’s Berkshire Hathaway became the eighth U.S. company to join the trillion-dollar valuation club.¹ It’s worth stepping back to put the magnitude of “a trillion” into perspective: A million seconds is just under 12 days. A billion seconds is around 32 years — roughly one-third of a lifetime. Yet, a trillion seconds is nearly 32,000 years — more than all of recorded history!

For companies achieving this milestone, success didn’t happen overnight. Buffett’s feat is nearly six decades in the making. When he took control in 1965, Berkshire Hathaway was a struggling textile mill valued at around $22 million.² Over the years, it has been fueled by time, compounding and perseverance, with profits reinvested into new investments, allowing the company’s value to substantially grow. However, this success hasn’t come without challenges: Buffett once suggested that the “dumbest stock” he ever bought was, ironically, Berkshire Hathaway. And, he has acknowledged plenty of other “mistakes” along the way.³

Buffett’s journey may be reminiscent of the old Aesop’s fable, where the slow-but-steady tortoise wins the race against the speedy-but-inconsistent hare. In investing, it’s easy to become preoccupied with short-term expediencies. Current concerns — like Canada’s declining productivity and lagging economic growth, or new questions about how far equity markets have advanced — often act to distract our investment focus. However, longer-term investors shouldn’t fixate on what might happen tomorrow as this tends to be largely unpredictable. It can also strain our investing ‘constitution’ and shift focus away from longer-term plans. Just look at how much has changed in one year: we shifted to a falling rate environment, expectations of a hard landing evolved into a soft landing, inflation largely tempered and, despite many challenges, the markets continued to advance.

While the double-digit market returns of 2024 have been exciting, they are a reminder that growth in both markets and economies is rarely linear. Viewing investment timeframes over decades highlights the profound impact of time on compounding growth. Investing $100,000 today at an average annual return of 5 percent, a fair expectation over a full market cycle, would yield around $115,000 in 3 years. Yet, over 6 decades — mirroring Buffett’s perseverance — it would grow to nearly $1.9 million!

Where will we be in a decade? With a focus on the longer term, a strong case can be made that both markets and economies will continue to advance. This doesn’t mean that downturns or setbacks won’t occur along the way, but viewing the wealth journey over longer periods allows us to view a full cycle of events — and the substantial opportunity should we choose to participate. While there’s never any guarantee of what tomorrow will bring, the only way to miss out on future growth is to sit on the sidelines. Here’s to a new year, the next quarter century — and beyond!

‍

^{1. https://www.visualcapitalist.com/berkshire-hathaway-1-trillion-club-how-long/; 2. https://www.berkshirehathaway.com/letters/1985.html; More than 99 percent of his fortune was accumulated after age 50: In 1980, BRK-A closed at $380; today it trades around $700,000 — a staggering 184,000 percent or a CAGR of 19 percent; 3. https://www.cnbc.com/2017/12/15/warren-buffetts-failures-15-investing-mistakes-he-regrets.html}

‍