Shelby Davis was a failure right up until the day he wasn’t.
He went to a prestigious high school then went to Princeton. After that he was a Wall Street analyst until the Great Depression smothered that dream.
He tried writing speeches for political candidates but flopped at that, too. By 1947, he fell back on becoming Deputy Superintendent of Insurance for New York. While it seemed that he was a disgrace, he had access to something that would change his life: information.
Specifically, he had all the data on which Property and Casualty Insurance Companies were doing well and which ones weren’t.
He bought stock in a handful of those companies with money he borrowed from his wife’s family and became a billionaire on that passive income alone.
One company he invested in Government Employees Insurance Company is now known simply as GEICO.
Don’t we all wish wealth building wealth through investing was this simple. We can’t believe that one stock choice or one trade is going to change our whole life, but we can learn some thing from this story:
Invest in Insurance Companies that make more than they pay in claims
I don’t mean your entire portfolio should be insurance companies. It also can’t be just any insurance companies.
GEICO was a great buy then. The company was making money hand over foot. Look into these companies very carefully. If you have a financial advisor, be sure to ask them how the underwriting of each insurance company works. Profitable underwriting is the key to picking which of these stock is worthwhile and which aren’t.
Why should these companies be a foundation in your portfolio? They do not have to pay for capital. That’s a distinct advantage.