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February, 2016

GENEROSITY - AN INVESTOR'S WAY OF PAYING IT FORWARD
by LARRY

Lest this essay suggest otherwise, let me clarify right off: my wife and I are not wealthy. We live in a modest house, do not buy the latest model cars, and love it when we have discount coupons for our favorite eateries, because we can use the money! In view of the high cost of health care, the chances of serious emergencies, and the uncertainties of the markets, we would feel more comfortable with a nest egg 2-3 times what ours is, so we could essentially live off the income.

Nonetheless, the relevant point here is that we have had substantial financial boons in the past from others, and it seems only reasonable that we would want in time to be able to similarly do our own parts in making things a little easier for others. Do we scrimp so we can help the homeless or feed the hungry? Not so much. I am reminded of Warren Buffett's comment, sometime in the middle years of his growing fortune when getting well meaning suggestions about how he could aid folks along the way. He replied that he could do greater good in such causes once he had attained real riches. Indeed, a few years ago he made one of the biggest charitable donations in history, about 90% of his vast resources. My wife and I shall never be in his league in that respect, but we too may do a bit more good if and when genuinely financially secure ourselves.



If that day ever comes, it will have been not insignificantly attained on the shoulders of people who have been openhanded toward us. In other essays, I have referred to such big and little gifts received, so will not go into detail again here except to say that, by my rough reckoning over the years the largess of others has helped us feather our nest to the tune of $130,000 or more, spread over a number of years. Many of my birth family relatives have received a like amount. If those benefits, starting in 1990 with $10,000, yet with several later supplements totaling I think at least $120,000 more, had been simply invested in the S&P 500 Index and held in tax-deferred accounts, left intact, with distributions reinvested, and received that index's average return since 1990, they would today be worth over $500,000.


Bargain-Priced Yet Strong Enterprises
CompanyTicker
Symbol		Recent
Price		Annual
Dividend		Return
on Equity		Debt to
Equity
Cardinal Health, Inc.CAH$80.731.9%21.1%80.7%
Fluor Corp.FLR$45.451.8%21.7%31.3%
Infosys Technologyies, Ltd. (ADR)INFY$16.413.5%23.7%0.0%
McKesson Corp.MCK$154.330.7%21.8%84.3%
Schlumberger, Ltd.SLB$72.462.8%5.8%53.0%


The importance here is not that we have a "Doh!" moment, like, why did I not invest instead of spending on shorter term goals !? Rather it is to suggest that a useful strategy for the future may be to merely spend any substantial funds that are received as gifts on mutual funds or individual equities likely to provide good returns in the years ahead, just as they have before.

And if that means that we get to retire or attain other intended targets that much sooner, all the better. Nest egg assets that are left invested for potential rainy day contingencies, and so untouched for more day-to-day needs, may well in time grow to the point that we, like those whose generosity has been helpful to us in the past, are able to then "pay it forward" and make charitable gifts to our preferred beneficiaries, be they relatives, friends, or very worthy causes.

It seems, anyway, like this might be a good idea for us. Good luck with your own gifts received and opportunities for personal generosity on down the road!



Meanwhile, if looking for some worthy candidates for investments that have a fine prospect of each doing as well at least as the market, at the table are a few long-term profitable, lower than average risk companies that might be considered, ones whose shares seem low-priced given their intrinsic values. A useful approach might be to buy such securities and hold them for a couple or three years or till up 50% or more, whichever first, then to replace them with other relatively cheap stocks of financially strong companies.


DISCLAIMER

Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)



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