The Rockefeller family, the secret of six generations of wealth passed down | Screws take you to read

Text | Bank screws (please obtain my authorization to reprint, and indicate the author and source)

Past Period Review:

The first one: "Patient Capital" translated a new book and went on sale

The second part: "Long-term investment is so difficult, why do you insist on doing it?" | Screws take you to read"

Part III: "How does asset allocation evolve from a single asset to a portfolio?" | Screws take you to read"

The fourth part: "Without asset allocation, this university actually earned hundreds of millions of dollars less |." Screws take you to read"

Part V: "What is Equity Investment: Buffett's Secret Weapon of Asset Allocation" | Screws take you to read (double benefits of buying books in the new year)"

Long-term equity investment

In the previous articles, we mentioned the importance of asset allocation.

Keynes introduced equity investments in college endowments, dramatically improving long-term returns.

Later investors have also joined equity investment and other assets.

Equity investments can provide more investment opportunities, and the rise and fall are not synchronized with the stock market.

Like Buffett is typical, a veteran investor who is good at both stock investment and equity investment.

In addition to Buffett, there are other classic cases of long-term equity investment.

For example, the famous Rockefeller family.

The Rockefeller family

Rockefeller was one of the most famous philanthropists and capitalists in the United States, known as the "oil king".

He merged more than 40 manufacturers and monopolized 80 percent of the refining industry and 90 percent of the oil pipeline business in the United States at the time.

Suppose that Rockefeller's wealth at that time, in proportion to the global wealth, is converted to the present, and he will have more wealth than the wealth of the world's top ten richest people combined.

But Rockefeller was also passionate about philanthropy, and not just in the United States, but in many countries around the world.

For example, the famous Union Medical College in China was first established with the support of the Rockefeller Foundation.

But what we're introducing today is not Rockefeller's secret to getting rich.

Rockefeller relied more on industry and accumulated a huge fortune.

But what's even more amazing is that to this day, the Rockefeller family relied on investment, and the wealth was passed down to the sixth generation.

Breaking our traditional belief that "the rich are not more than three generations".

How is this done?

The father of venture capital

Rockefeller had only one son, John Rockefeller Jr.

Rockefeller passed on his family wealth to his son.

At this time, the wealth of the Rockefeller family was more of a traditional allocation method.

Holdings are the family's previous businesses, real estate, and a portion of the bonds. In particular, one's own family business is the main component of wealth.

After that, John Rockefeller Jr. watched more of the family business.

Later, it was passed on to the third generation of the family.

In the third generation, a pivotal figure emerged, Lawrence Rockefeller, also known as the "father of venture capital.".

He successfully transferred the Rockefeller family's wealth from a traditional family business to equity investments.

In the early days, Lawrence, who was more involved in some of the family's previous businesses, gradually became familiar with investment.

In the process, Many of Lawrence's investments were blue-chip stocks or companies that had business dealings with his family.

By 1946, Lawrence had made an attempt to form a Rockefeller Brothers Foundation.

In addition to Rockefeller and his brothers, the foundation also innovatively introduced a number of outside investors.

This foundation focused on investing in some optimistic, innovative enterprises in the direction of military industry, science and technology at that time.

In the process, Lawrence gradually discovered a new investment model.

Traditional investors are in the stock market, investing in companies that have already gone public.

But these companies are often relatively large after going public, and have passed the period of the fastest development.

If you can intervene in these companies at the beginning of the year, you can get shares at a very cheap price for earlier participation.

If you can use your own capabilities and resources to help these enterprises develop more rapidly, your return on investment will be higher.

With this idea in mind, in 1969, Lawrence changed the previous foundation to Venlock Ventures.

It is also the combined name of venture (risk) and Rockefeller (Rockefeller).

In the 1960s and 1970s, just after World War II, the rapid development stage of the US stock economy, a variety of innovative enterprises emerged in an endless stream.

Vinlock Ventures began looking for some early potential corporate investments.

Intel, Apple and other companies have become one of the projects of Venlock Venture Capital.

Lawrence also became the father of venture capital.

The Rockefeller family has also officially completed the transformation from family wealth to professional investment.

Private equity funds are booming

The traditional family business model faces some limitations.

On the one hand, family businesses are subject to their own industries, and many industries are cyclical, especially those with strong cyclicalities such as oil and steel.

If you have been stuck in your own industry, the family wealth cannot be diversified, and the risk will be relatively high.

On the other hand, not all talents are willing to join their own families.

Sometimes through the way of investment, holding the equity of the optimistic company, you can also get more opportunities.

Later, various private equity investment funds also gradually flourished.

summary

By now, we have seen several major players in the allocation of large-scale assets.

The earliest investment in farmland and forest land.

Later, equity investment was introduced, which improved long-term returns.

Later, equity investment and private equity funds were introduced, which also became part of the source of income.

In fact, for long-term capital, these asset allocation tools are not in conflict, and can be used together.

Different assets, the long-term up and down trend is not the same, after the combination, the volatility of the entire portfolio, compared to investing in only one type of asset, it is greatly reduced.

Finally, each class of assets can reap long-term returns, and the overall portfolio will yield good returns.

College endowments, wealthy families, and practitioners of the concept of asset allocation.

These ideas have also gradually been passed on to some institutional investors with larger assets, such as pension funds and sovereign funds.

So how do these institutions practice asset allocation?

To find out what happens next, listen to the next breakdown.

Author: Bank Screw (please obtain my authorization to reprint, and indicate the author and source)

PS: Friends who are interested in index funds, welcome to read the "Index Fund Investment Guide" and "Ten Years of Financial Freedom".