At the end of 2016, this chart was floating around the interwebs:

When I first saw it, I emailed it to myself for further study. I believe this chart is from:   which is worth checking out. Thanks Randy B for the recommendation.

This chart is fascinating.

It shows you were all the money is. Jerry McQuire would be very happy.

We can see where people are spending more money and where they’re spending less money.

This may help us find better investments and better business opportunities.

Here are a few things to note:

  • Do not invest any any book stores, book publishers, or newspapers. In fact, don’t bother writing a book. You won’t make any money, unless it’s sales tool for your business.
  • Booze is a very stable business. It hasn’t changed much in 75 years. This means it can be a conservative long-term investment opportunity.
  • Tobacco continues to decline. Thank god. Damn cancer sticks.
  • The cost of education has been on a constant increase for the last 75 years and may represent a profitable investment opportunity.
  • Recreation and entertainment is has performed well over 75 years and may represent a profitable investment opportunity.
  • Health care has been on the rise and will continue going forward based upon the poor health of the average American. We’re overweight and this will bring many health problems. Health care has been and will continue to be a good investment opportunity.
  • Food. It is what it is. We need it. It should be a good long-term investment opportunity with more volatility.
  • Transportation is also something we need. I have no clue what the future holds with self driving cars and all, but one thing is certain…. we NEED transportation.
  • Housing? I’m not very smart, but it looks like it might be a good opportunity.

By studying this chart, we can easily see that people always spend money on things we need: health care, food, transportation, education, and housing.

These are the areas we should consider leveraging to our advantage:

Acquire income producing assets in health care, food, transportation, education, or housing.
Reinvest the income collected into health care, food, transportation, education, or housing.

As an example, buy income producing real estate. Use the income produced by the real estate to buy shares of index funds in the health care, food, transportation, or education. Setup a compounding money machine in the most profitable industries.

Build a business in health care, food, transportation, education, or housing.
To diversify, reinvest the income from this business into one of the other necessities of life separate from your business.

Build a business in housing —-> invest profits into health care
Build a health care business —-> invest profits into real estate

In years past, I had multiple businesses in the housing industry and reinvested my profits into housing.

This strategy obviously carries significant risk.

Everything I had (except one odd investment), saw significant declines at the same time. Not the end of the world, but certainly very challenging.

You don’t need a money manager. This isn’t rocket science. Simply follow the money.

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