Deep Dive - Thinking in Generations Instead of Quarters: The Crucial Role of 'Skin in The Game'

In the world of investing, much attention is paid to balance sheets, profit and loss statements, and macroeconomic trends. Essential, without a doubt. However, one of the most critical factors for long-term success is often underestimated: the quality and motivations of management.

The term "skin in the game", made famous by Warren Buffett, states that the key figures of a company must also be significantly invested themselves. As an investor, you entrust your capital to a management team. The crucial question then is: are they acting as a temporary passer-by (an agent) or as a dedicated owner (an owner-operator)? The answer to that question has far-reaching consequences for your return.