My wife, my kids and I have attended many B'nai Mitzvot (plural of Bar or Bat Mitzvah), nearly every weekend, over the course of the past several months. I always get asked the question:"What should we do with the child's gift money?" Several years ago, I devised the Bar Mitzvah portfolio. The portfolio, which I periodically update, is comprised of growth and income stocks, and I constructed it in such a way as to pique the interest of a teenager, including stocks that the beneficiary can identify with. For example, a teenager would likely be more interested in a stock whose products he or she is familiar with, such as Apple ( AAPL), than in a stock like Olin ( OLN), which I own for my client accounts at LakeView Asset Management And I wouldn't want to draw a teenager's attention to Boston Beer ( SAM), even though it is one of my favorite stocks. So here is the Bar Mitzvah Portfolio, in its current version:
Apple ( AAPL): Apple, the maker of iPods, iPhones and Mac computers and operator of iTunes, iChat and the Safari web browser, is one of the most recognizable brands by preteens and teens (not to mention most if not all of the older age groups as well).
Google ( GOOG): Is there a kid out there who does not "google" things on the Internet?
McDonald's ( MCD): My generation grew up with Ronald McDonald, the Hamburglar and the Golden Arches.
First Israel Fund ( ISL): It's traditional to give the Bar or Bat Mitzvah child cash or Israeli bonds as a gift. I've taken this concept one step further: Let's give the child stock in Israeli companies.Israel was one of the best-managed economies during the Great Recession. Furthermore, Israel is a hot bed of technology, engineering and biomedical research. I strongly suggest that you pick up a copy of Start-Up Nation by Dan Senor and Saul Singer to get a deeper appreciation of the Israeli economic miracle. ISL is a diversified portfolio of Israeli stocks, with the largest holding, comprising about 11% of the portfolio, in Teva Pharmaceuticals ( TEVA). ISL sell at a discount to its net asset value of about 7%. If you prefer, you may substitute ISL with exchange-traded fund iShares MSCI Israel ( EIS). I own both for my clients.
Schlumberger ( SLB): I felt that it was necessary to put an energy company into the Bar Mitzvah portfolio; it's hard to construct a portfolio without one.
Goldman Sachs ( GS): Having already included technology, consumer discretionary, food, international and energy companies in the Bar Mitzvah portfolio, I now had to search for a financial services company.