benjaminalbiach Warren Buffett has famously said that he wants for his assets to be put into the S&P 500 ( SPY ) after his passing, as he recognizes the power of compounding capital invested in the 500 biggest U.S. companies and the passive nature of this approach.
However, he and many investors don’t adopt that strategy, as getting the average market return is simply boring, for lack of a better word. The same goes for intelligence, beauty, performance, and income, as you’d be hard-pressed to find someone who relishes being average. That’s what can make investing in individual stocks a potentially rewarding experience as investors seek to obtain better than average total returns, income, downside protection, or any combination thereof.
Great investment asset classes for the above attributes could be real estate and infrastructure, and while some investors may opt for buying properties on their own, it’s simply hard to obtain meaningful returns without taking on leverage, as SA Analyst Lyn Alden Schwartzer so aptly put it in a recent brilliant piece . Plus, in this high interest rate environment, high mortgage rates break the investment thesis for many private real estate investors, particularly those who seek positive cash flow. That’s why it pays to invest in publicly-traded companies, which carry institutional quality assets that enable them to obtain unsecured debt (vs secured mortgage debt) at favorable rates that individual investors simply can’t get.
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