Wealth can be created and destroyed. Wealth is created when the investment of time, money, and energy arrives at an endpoint where the profit obtained is greater than the investment made. A simple example: you give your child ten dollars, allowing her to purchase supplies to open a lemonade stand. She builds the storefront, stocks inventory, and perhaps employs her brother to operate the store. In return for your investment, she pays you back plus a handsome dividend (unless you drink all the profits). She is thus rewarded with a profitable ongoing business, and you have maybe twelve dollars instead of ten. Everyone wins; wealth is created.

“Liquidity is oxygen for a financial system.”

—Ruth Porat, CFO of Alphabet

Wins above replacement (WAR) is a baseball metric that describes a player’s value in terms of how many more wins he brought to his team than a replacement-level player at his position would have. It is a measure of the effectiveness of an individual within the team and a statistical attempt to quantify if he is worth what he is being paid. Ranking players by WAR might seem harsh, but a company’s resources are finite; it has to deploy its capital strategically and responsibly.  

“I don’t want to belong to any club that would accept me as one of its members.”

—Groucho Marx on his resignation from the Friars’ Club*

The global equity markets provide the closest thing we have to a free lunch. With little effort, they provide individuals with the means of growing their money over time and above the rate of inflation, thereby providing a savings method that not only preserves purchasing power but increases it.