Simplicity is the keynote of all true elegance

Today is another Sunday, the last day of the children's school holiday and the last day of my one-week vacation. I don't want to repeat clichés, but "winter is coming." I'm probably getting old because lately I find myself thinking more and more often about sunny regions where I could just lie in the sun. I imagine myself somewhere in southern Spain or Andalusia, walking through the streets of Seville, dressed in rays of sunshine. I've wondered whether different parts of my body might age at different rates. My bones are probably the oldest, because they seem to be the source of the cold that surrounds me in the morning.

And it's not necessarily that I only want warmth. There are mornings when I wake up wishing I could smell that cold winter air. Do you know what I mean? When you open the door and are hit by that freshness of winter snow. Last week I had a similar flashback when I opened a window and a pleasant spring breeze flooded the room. It instantly made me think of my childhood, of spring afternoons in Craiova, and of how I used to walk through the streets of the city as a teenager.

The only explanation I can offer is that the older we get, the more inclined we become to reflect on our lives. We carefully analyze everything we live through and experience. Now, at 40, I pay attention to the smell of the morning air. At 15, I would open the door and immediately occupy my mind with something else, certainly some stupid thing to keep me busy, but hey, that's life. I try to figure out whether this phenomenon happens only to me or not. And the truth is, I don't really care that much.

The stories of our past are what guide us into the future. Laura, Luca, try to pay attention to your present, my dears. Only by paying attention to your life today will you be able to relive your memories in the future. Try to analyze everything, to pay attention to the world around you and to what it means to you. A large part of the population believes either that history repeats itself or that history doesn't repeat itself but rhymes. I believe both are misguided ways of waiting for a broken clock to show the correct time twice a day.

Today I want to talk to you about how lessons from the past can guide our future, and not only that. Lessons from the past guide the choices we make in the present. You might wonder how that works. But imagine that without a rich past, you cannot objectively analyze the present and cannot make optimal decisions. Today I want to tell you the story of Gabrielle Bonheur. Does that name mean anything to you? But what if I say Gabrielle Bonheur Chanel? Nothing? But what if I say Coco Chanel? Aaaaah, yes... now something comes to mind. Probably Chanel No. 5.

In February 1923, in a published interview, Coco Chanel said, "To my mind, simplicity is the keynote of all true elegance." In 1923, she was already well known in the fashion world and beyond. Chanel No. 5 had been launched in 1921 and had carried the fashion house beyond the boundaries of fashion. We could say that Coco was at the peak of her influence. This conviction pushed her, in the following years, to popularize the simple black dress. To understand exactly what she meant, we must try to understand her past. Coco was born into a poor family, where her father was a traveling salesman and her mother a laundress. Her mother died when she was 11, and her father abandoned her and her sister. Both girls ended up in an orphanage. By the age of 26, she had opened her first fashion boutique in Paris using money from investors in her social circles. Out of this entire whirlwind, what is important to remember here is the poverty in which she lived at the time. If we compare this period of her life with the last 34 years of her life, years she spent as a permanent guest at the Ritz Hotel in Paris, we might wonder whether anything had changed for her. The Chanel Suite at the Ritz Hotel in Paris costs approximately 20,000 euros per night today, while the other rooms cost around 3,000 euros per night.

How can someone pay that kind of money for 30 years and still maintain a mentality of Simple is better. Most likely, she also changed as she grew older. I sit here reminiscing about spring days and rays of sunshine, while she sat in one of the most luxurious hotels in the world thinking about how beautiful a simple and unpretentious life is. Maybe she even imagined what it would be like to live a paysanne life in the countryside, with animals and lavender fields in Provence, or maybe that's just my imagination.

From this entire story, however, I would take away the idea that simple is always much better than complex. I would now like to bring you back from this story and look at the way we invest the money we earn. Think about your stock portfolio, how diversified it is, and try to remember why you made those choices. The lesson I am trying to teach you today is about how you choose to invest your money and what you invest it in. How diversified is your portfolio, and how much time does it take you to analyze it?

My advice is to think like Coco, but don't act like Coco. On paper, a simple plan seems superior, but life tends to complicate it, and more often than not, we fall into the trap of money and the desire for even more money. In your adventure as investors, you will most likely start timidly, with a few investments in a few companies or sectors. I expect that before investing in a particular sector, you will do your due diligence and try to understand the business in its entirety. Imagine that you want to invest in energy as a sector. You will need to understand the planet's current energy needs, how energy is produced today, but also how these figures will evolve in the future. For example, at present, the primary source of energy is oil-based, but it is beginning to lose ground. Over the past decades, Europe has placed significant emphasis on renewable energy and has made considerable progress. What will happen in the future? Most likely, energy will become even more necessary, not only because increasing technological development generally consumes additional energy, but also because of the entire AI boom. Monetary values already have correlations with the energy consumed; think about Bitcoin. The price of Bitcoin is partially dictated by the electricity consumed to mine it. I am sure that if the cost of electricity doubled overnight, its price would also experience a significant increase.

Alongside an increase in the planet's energy needs, we are also seeing a shift in the type of energy. Oil-based energy is being replaced by electricity. I find it hard to believe that the coming decades will be dominated by enormous plants burning oil to produce electricity. So, as an investor today, I would bet on electricity accounting for an increasingly large share. That means any investment in electrical infrastructure could generate good returns. This includes electricity generation, transport and storage, maintenance of the networks, and its consumption by end users. End users can include the electric cars we charge or the various AI companies. And when we talk about AI, we are talking about Hardware, Software, Cloud Computing, Data Centers, and Raw Materials. So, as you can see, everything we have just gone through is only one investment sector.

How can you invest in several? Why would you be so arrogant as to believe you are superior and able to do it? Remember one thing: the moment you become arrogant is the moment you become stupid. And the world is full of stupid people. I am not raising stupid children, so pay attention. Most investors make their money in a limited sector. Because they achieve great success, they become arrogant, believing that their knowledge applies to other sectors as well. The more money you have, the more you risk becoming arrogant, and the more stupid you become. Your capital is at risk of being destroyed.

My advice is to keep it simple. At any given moment, do not have investments in more than three different sectors. First of all, you do not have the time necessary to understand each field well enough to allow you to invest in it, and secondly, you do not have the time necessary to do your due diligence on the companies within that field. And even if you have the time to research and identify, let's say, six companies you want to invest in, when will you have the time to track those companies and determine whether they remain good investments if you are occupied with other things?

I am not saying that investing in multiple sectors and hundreds of companies is impossible, but you must remember that you are not Warren Buffett. You don't do this as your main job, you don't have his resources, and you don't have his track record. So... Simplicity is the keynote of all true elegance.