Money Manager Hatchuel: Life, Liberty, Happiness as Investment Themes

Tuesday, 05 Feb 2013 11:05 AM

By Dan Weil

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Having trouble figuring out which financial assets to buy? Try using the Declaration of Independence as a guide, says Romain Hatchuel, managing partner of money management firm Square Advisors.

It’s all about life, liberty and the pursuit of happiness, he writes in The Wall Street Journal. “Although these concepts may seem abstract to investors, they can provide useful guidelines for investing in uncertain times.”

Life signifies food, shelter and other primary necessities.

Editor's Note: The Final Turning Predicted for America. See Proof.

So perhaps that explains why the Standard & Poor’s 500 Index registered a total return of 8.59 percent for the five years ended last December, while the sub-indices for packaged foods, household products, mega-retailers and home improvement all climbed by at least twice that amount, Hatchuel writes.

In terms of liberty, “in troubled times, markets will always pay a higher price to countries where the rule of law, sensible governance and democracy reign,” he says. For example, the dictatorship in Venezuela faces higher interest rates than does the government of Lebanon, despite sharing the same credit rating and Lebanon having “political difficulties.”

As for happiness, the sub-indices for soft drinks, movies and entertainment, and restaurants have outperformed the S&P 500 over the last five years, Hatchuel says.

To be sure, Hatchuel’s system appears quite arbitrary. If the Declaration of Independence guides us to invest in shelter, what were we supposed to do with homebuilder stocks at the peak of the housing bubble?

Editor's Note: The Final Turning Predicted for America. See Proof.

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