At the turn of last century, Andrew Carnegie was the richest man in the US with the bulk of his fortune coming from Carnegie Steel which was merged into US Steel. You may also know his name through the free library buildings he gave. Mr. Carnegie originally worked for a railway and was able to be a position where he was included in insider purchases. When the railway boom was on, the method to make the greatest amount of money was first the the railway bonds were sold. Second, the insiders had the contract to build the railway in which the money raised included a significant portion for the insiders. Third, when the railway was finished, most of the time the railway bonds decreased in value as there was little traffic. Eventually the lines were consolidated and then money was to be made for monopolies were set up. As an insider, Mr. Carnegie moved from being involved in the railway to being a supplier for the railway. First he was involved with an oil company, then a supplier of iron rails. It was in this phase which he learned about steel making and soon had the best steel plant in the US to make steel rails; for the railway companies changed to steel rails as they are durable. When the boom of railway building slowing down, Mr. Carnegie moved to plate steel and uses for ship building, bridge building and eventually automobiles. The merger into US Steel was worth today’s $ 150 billion.

Mr. Carnegie’s first investment was in oil wells in Pennsylvania and discover the wonders of receiving a dividend payment. He was hooked on capitalism and receiving dividends..

Although the rules were different, than they are now, it is interesting to note Mr. Carnegie’s investment strategies which were outlined in the book Andrew Carnegie by David Nasaw, Penguin Press, New York, 2006

Only invest in companies you have investigated yourself

Only invest in companies which you have insider knowledge

Only invest in companies that sell goods or services for which demand is growing

Never invest as an individual but as a group with trusted associates who together will own a controlling or dominant interest in the company.

The rules of investing have changed and insider information is used for short term gains, however investing in long term, means you have to continuing be aware of the industry although there are simple measures such as asking is the dividend safe? will it continue to be paid? Rather than insider information, one should say informed which means keeping abreast of the trends and developments in the company.

There are more questions than answers, till the next time – to raising questions.