An Investing Chart Placed In The Home Of A Wealthy Family

I received an e-mail from a reader who brought to my attention the fact that different sectors of the U.S. economy have very, very different records of building wealth for the shareowners, and he shared with me a story of how his father handed him a chart of each sector’s performance as an aid for him as he began making substantial investment decisions in his own life (he disclosed to me that he invested a bit here and there, and then upon seeing his salary go up big time, he was able to start investing $2,500 per month and began to take things more seriously).

The data he was referring to is this: The S&P 500 consists of ten different sector segments (Materials, Energy, Telecommunication Services, Utilities, Industrials, Financials, Consumer Discretionary, Information Technology, Consumer Staples, and Health Care). Over the past fifty years, the average returns by segment has been: … Read the rest of this article!

Trust Funds With Restrictions On Investments

Many people who establish trust funds for their kids or some other beneficiaries tend to include restrictions on how the investment funds are to be allocated. A common clause is to state that all stocks and corporate debt in the trust must be classified as “investment grade.” On the surface, this provision sounds intelligent enough. Of course funds meant to last for long haul should be invested in durable companies. Very few durable companies have debt that is not classified as investment-grade during good and ordinary times.

However, it is also true that some durable companies tend to have their credit ratings slashed during recessions and other unanticipated deterioriations such as the spread of COVID-19. 

To use a local example, I live in St. Louis and many trust funds contain a disproportionate amount of Anheuser-Busch Inbev (BUD) stock because Anheuser-Busch was originally found in the city and the decades and … Read the rest of this article!