Two young fish are swimming in the ocean when an older fish passes by and says, 'enjoy the warm water today.' The two younger fish look at each other and ask, 'what the heck is water?'
What is the stock market? This might sound simplistic, but without intuition about the markets and where they came from, it is difficult to have intuition about Marlowe's perspective on investing. My grandfather was a limitless source of common sense. One proverb of my childhood: two young fish are swimming in the ocean when an older fish passes by and says, "enjoy the warm water today." The two younger fish look at each other in confusion and ask, "what the heck is water?"
If we are going to swim together, it is worthwhile to know something about the environment that I've spent my adult life studying. The stock market as we imagine it today is young, perhaps 400 to 500 years old. Prior to that, the world operated in a mercantilist system. Commercial opportunities didn't need a stock market, as persistent capital needs weren't around. This changed with the building of the so-called New World, namely the Americas, starting about 500 years ago.
It was with the growth of the New World that major economic growth for all of Europe and all of the West began. This economic growth continues today and has become—as far as we know—a pinnacle of sorts for humans in terms of various metrics, such as life expectancy, technology and other factors. And it all depended on allocating large sums of capital.
With the discovery of the so-called New World, came new projects on a scale never seen before. With a newfound need for capital, came the invention of companies. At first it was the sovereign who would finance a particular project. Large capital projects intended for commercial purposes were rare. When it came to the New World, the capital could be deployed on a scale of war, and eventually at a scale beyond it. Regardless of the project, when providing capital, the investor was committed to it. There was no easy way out once the money was invested. By the nature of the circumstance, an investor would participate in the enterprise's success via profit sharing, or its failure, via loss of capital. This is the concept of an investor.