Of the many things I probably should’ve paid attention to, a concept I kept on reverting back to in a rare interview with Anthony Deden of Edelweiss Holdings was ‘independence.’

Edelweiss’s approach is what I would characterize as helping current clients ‘stay rich’ for future generations. Deden’s approach to ‘partnering’ with businesses resembles this focus. His decision to allocate 40% of the fund into ~3 tonnes of gold bars has been insightful as well. Deden analyzes companies and runs a portfolio quite unlike most funds one finds in North America. Though I found myself having differing opinions at certain parts of the interview, I couldn’t help the getting further interested with his perspectives. I know…even I wondered “who am I to disagree” but isn’t the point to have an opinion first before correcting it if need be?

Anyhow, back to independence. Having differing opinions is a good segue here as Deden mentions two applications of independence in the interview. One is directly related to a business itself. Whether the business is dependent on many external factors that make it fragile or not. The second refers to the individuality for an investor. That every investor has different goals, circumstances, and purpose for why they are investing and this is something to keep in mind if one is to hear the opinions of other investors.

First, the business.

The 2020 COVID-19 pandemic revealed many things but one in particular related to the fragility of global supply chains as national borders were shut and when China makes everything in one’s home….well, it became a problem. Turns out, much of the world relied on China for all kinds of things and our dependence showed a fragility to the system. Same for a business that has one major customer and/or supplier (i.e. Porter's Five Forces).

This made me start questioning businesses with regulatory capture as well. This could incorporate various infrastructure/transport companies. Healthcare for some countries as well. People assume a government acts in the interest of its citizens. But which citizens? The folks who work in government are citizens too. Will they help people like them over people like me? I don’t know but companies that rely on some kind of regulatory overlay are dependent on an actor whose ‘allegiance’ isn’t truly certain. This is a dependence that some might think is an advantage.

This is why an exercise of mapping out the entire value chain for companies might be one worth doing. I remember trying to do this for tire companies which started from rubber plants and ended with carmakers. I didn’t like what I saw then but such an exercise could shine lights on weird parts of the chain where there is an oligopoly of sorts. This seems rather rudimentary to say “yep oligopolies are great.” No shit. But it’s not about taking this as face value but thinking through why certain companies might be oligopolies and if all oligopolies are independent.

At the moment, I think a monopoly is a truly independent company. I think that is indeed synonymous with the definition of a monopoly. They aren’t reliant on the customers or suppliers and they have the power in the relationship. An oligopoly, well there is some leeway there. One can say most owners probably aspire for monopolies but get to oligopolies and capitalism will eventually compete them away. Nevertheless, an independent business is something every company probably aspires to be. Especially if one believes a business is an extension of people and people strive for independence in life so the same can be said of a business.

So, what does an independent business look like? Probably doesn’t depend on a handful of customers for most of its revenue. It probably has lots of suppliers competing against each other for this independent company’s business. Suppliers would include APIs and platforms that an entire business could be reliant on. It’s probably led by owners who don’t let the short term financial market influence them. Owners who don’t know what their market cap is. The owners should also not be wasting time on places like Twitter playing pissing contests. An owner who has done considerable work on being self-aware so they can ignore the outside world (think this is hard in a different way for the billionaire founders who have fuck you money). Probably, it’ll hire and develop people who won’t use extreme political views to change the business. Probably has the government reliant on them than the other way around. Can’t forget being independent from the financial markets in regards to its balance sheet as well (cash money baby). I think that’s a start.

Second, the investor.

There are a number of investors I admire. I can’t imagine any investor not having listened to the many interviews of Buffett and Munger, as well as the archive of all the Berkshire annual meetings. Buffett and Munger don’t tend to give specific advice. They don’t necessarily share much detail about what they do, only what they did from the results one finds in the Berkshire annual report. In many ways, their general advice is worth heeding for all investors. But it’s also worth considering the context at which they gave certain advice and made certain decisions. They share the caveats too like when Buffett talks about how his unique case of having so much capital to deploy impacts how he invests. Such spoon-feeding might’ve led to investors forgetting that every investor (whether a fund manager on a podcast or someone on twitter) has their own unique set of goals and circumstances.

Such independence is essential for the investor. Not just independence in thought towards an investment but independence on knowing what kind of game the investor is playing. Plainly, the game I play is very different from Buffett. Given my capital base, my goals, and my socioeconomic circumstances, I will look at investing differently than other investors. This is important when I digest information from other investors. When I hear a stock pitch or an opinion on a business or even observe a change in an investor’s portfolio, I have no idea what reasons led to the information. I also don’t know how it relates to my own unique circumstances. This is a crucial topic worth reminding myself time and time again as someone who loves consuming information from other investors.

I hope, with enough reinforcement, this model of seeking independence in a business and in my approach as an investor will stick.