Are You an Owner or Just Renting Your Stocks?

Brookfield Corp. (BN) is one of the holdings in The American Prosperity Report portfolio.

As one of the world’s largest alternative asset managers, Brookfield has thrived under CEO Bruce Flatt, who’s been at the helm since 2002.

His track record is nothing short of remarkable — $1 million invested in Brookfield shares back then would be worth over $185 million today.

Source: Brookfield Corp. Investor Day Presentation 2024

Brookfield’s return over 30 years outpaces Berkshire, LVMH, and the S&P 500.

Bruce Flatt has earned the nickname “Canada’s Warren Buffett” — and for good reason.

His investment style is disciplined, his track record is decades long, and he has real skin in the game with a large personal stake in Brookfield.

Like Buffett, Flatt focuses on long-term value, smart capital allocation, and compounding wealth over time.

Under his leadership, Brookfield has grown into a global powerhouse, delivering massive returns to shareholders.

That’s why I never miss a word of his quarterly shareholder letters. Every one of them is packed with valuable insights.

The latest letter, released on February 13, is one of his best.

After recapping Brookfield’s strong 2024 results, Flatt posed a simple but powerful question: Are you an owner or just renting your stocks?

Your answer to that question could be the difference between building real wealth or watching your portfolio go nowhere.

Owners Win, Renters Lose

Most people treat their stocks like rentals — buying and selling at every price swing.

But real wealth is built by thinking like an owner, just as you would with your own business.

You see, there’s a psychological phenomenon that most people don’t even realize affects their investing. People treat what they own very differently from what they rent.

Think about your car.

If you own it, you take care of it — you don’t go flying over speed bumps, and you make sure it stays in good shape.

Now think about a rental car.

People drive it harder, take less care, and don’t worry about the wear and tear. That’s someone else’s problem. As the saying goes … “Who ever washes a rental car?”

The same thing happens in real estate — rental apartments have 50% more wear and tear than owner-occupied homes, even in the same buildings.

Owners care about their homes because they have long-term skin in the game.

Stop Renting Stocks — Start Owning Businesses

Now, here’s where it gets interesting…

Many people own stocks, but they treat them like rentals.

They buy a stock and watch the price like a hawk — ready to sell at the first sign of movement. If it goes up, they think, “Time to cash out!” If it goes down, they panic and sell.

But here’s the thing — owning a stock is no different from owning a business.

If you owned a private business, you wouldn’t wake up every morning and ask, “Should I sell today?”

Instead, you’d focus on building the business, reinvesting profits, and compounding your wealth over time.

Here’s what the great investors do:

They buy great businesses in industries with tailwinds that have strong balance sheets run by rock-star CEOs.
They hold them for the long haul, ignoring the daily noise.
They let compounding do the work, growing their wealth over decades.

The stock price moving up or down doesn’t change the value of the business. If anything, it just tells you whether Mr. Market is having a mood swing that day or if he forgot to take his meds.

Do you check the price of your house every day? Do you sell your home just because someone tells you its value changed? Of course not.

Yet, most stock investors act like renters, selling simply because the price went up or down.

That’s a losing strategy.

Your Strategy to Build Real Wealth

If you truly want to build wealth, you need to act like a business owner. And that’s exactly our approach:

Hold great businesses like you would a home you live in.
Focus on the business, not the stock price.
Only sell if management is making bad decisions or the business is deteriorating.

This isn’t easy — especially with stock prices flashing on your screen all day and social media hyping up the next “big trade.”

But Real Talk: owning a house and owning a great business are two of the best tax-advantaged ways to compound wealth over time.

If you can compound at just 10% or more but do it for decades, the wealth you’ll build will be astonishing.

Heck, Warren Buffett became one of the wealthiest people in the world, compounding money at 19%, but he did it for close to 60 years!

Through the magic of compounding, that was enough to turn every $10,000 invested in 1965 into more than $550 million today.

The alternative?

Renting stocks — trading in and out, racking up taxes, and missing out on the long-term gains that come from true ownership.

Unless you’re one of the very few truly skilled traders, being an owner will always beat being a renter.

So next time you think about selling a stock just because the price moved either up or down — ask yourself: “Am I acting like an owner or just renting this stock?”

Asking that question could prevent you from making a very costly mistake.

Regards,