The Intelligent Investor's Almanac
Your Bi-Weekly Guide to Markets, Movements, & Money.
Presented By Ken Majmudar & Ridgewood Investments
Issue 7 • June 01 to June 15, 2025
Never miss another valuable edition of The Intelligent Investor's Almanac again.
Your TL;DR Institutional Intelligence
- Mindset Over Math: $72,000 invested in 1924 at 10% would be ~$1 billion today. The challenge isn’t the return — it’s staying invested for long enough.
- Conviction Counts: Even great investments like Amazon and NVIDIA saw 50–95% drops. Conviction, not timing, is what builds wealth.
- Planning Opportunity: Trump’s proposed tax bill could open a window for updating trusts, transferring assets, and optimizing estate plans.
- Action Step: Review your estate documents, insurance coverage, and gifting strategy to align with the evolving policy landscape.
The Value Investor
Ken Majmudar, CFA & Founder of Ridgewood Investments
Imagine this. It’s 1924. Your great-grandfather has $72,000, which he received as the proceeds from selling a small business. Instead of spending it, he quietly invests it in a low-cost U.S. stock index fund (this is a thought experiment – as of course index funds did not exist until around a half century later) and leaves it untouched. He tells no one. One hundred years later, that investment is worth nearly $1 billion.
That didn’t happen for most families. As of 2024, the United States has just 813 billionaires. And yet, the math of compounding says there should be many thousands more. So what happenened?
“The big money is not in the buying and selling, but in the waiting.”
~ Jesse Livermore
The real culprit behind lost fortunes isn’t inflation, recession, or war. It’s behavior. It’s touching the portfolio during a storm. It’s chasing what’s hot and fearing what’s falling.
Even when compounding is working perfectly, it doesn’t feel like it.
At various times in their history, Amazon dropped 95%. NVIDIA dropped 90%. Charlie Munger’s fund endured a 53% drawdown. And yet, all became case studies in wealth creation because conviction lasted longer than the pain.
At Ridgewood, we see this over and over again:
Markets don’t destroy compounding. Investors do.
This is why we always say:
Your portfolio should reflect conviction in markets. Not just the version of your conviction in a calm market, but the one that shows up during a 30% drawdown.
Drawdowns: The Real Test of Compounding Conviction
Based on a sweeping 40-year study of over 6,500 stocks:
The median drawdown was 85%, with the average time to recover back to the previous peak being over 3.8 years.
And while not all stocks recover, many that do go on to generate extraordinary long-term returns.
As Munger said:
“If you can’t handle a 50% decline two or three times a century, you deserve the mediocre results you’ll get.”
The Power of Compounding Visualized
In the early years, the principal did the work. Then interest on interest takes over. By year 30, compounding becomes the engine.
Now ask yourself:
Do you want your beneficiaries to start at zero, or on the back of a 30-year head start?
Can You Handle the Cost of Compounding?
Rule of 72: Divide 72 by your expected return to estimate how long it takes for money to double.
Example: 10% → 72 ÷ 10 = ~7.2 years to double.
What You Can Do This Month
Even the longest journey begins with one quiet decision. Consider taking these small steps:
Automate one monthly investment – no timing, no guessing.
Revisit your drawdown tolerance – and align your asset allocation accordingly.
Have the conversation about setting up compounding for your beneficiaries such as children or grandchildren or charities.
These aren’t dramatic moves. They’re long-term ones. And that’s where compounding lives.
One Final Thought
At Ridgewood, we help you build a portfolio that compounds quietly, patiently, and perhaps even across generations.
“The stock market is a bar of soap — the more you touch it, the smaller it gets.”
~ Peter Lynch
Compounding isn’t magic. It’s math + mindset.
The hardest part isn’t understanding it, it’s not interrupting it.
Dynastic Wealth – Tips on Preserving and Building Your Legacy
What Trump’s “One Big Beautiful Bill” Could Mean for Generational Wealth
When tax policy shifts, thoughtful families don’t react; they realign.
Donald Trump’s proposed “One Big Beautiful Bill” proposes significant changes that could impact how wealth is invested, transferred, and taxed in the years ahead. While headlines focus on politics, we focus on the provisions that matter most to long-term stewards of capital.
As always, we aren’t here to cover every detail, only some of the key provisions that may be most relevant to Ridgewood clients: the rules that determine what your heirs retain, how your assets grow, and where quiet planning today can yield generational benefits tomorrow.
Key Proposals That May Affect You
Strategic Implications
Even if not all proposals pass, the direction is clear: the environment is turning more estate-planning-friendly and investment-efficient.
Step-up in Basis Still Safe: Heirs won’t pay capital gains tax on past appreciation, your investments will reset at fair value.
Gift Tax Rate Cut: Lifetime gifts beyond the exemption face a 35% tax instead of 40%. If you plan to give large assets, this is a small but notable edge.
Trusts Stay Relevant: Even if taxes drop, trusts remain powerful tools for control, creditor protection, and legacy goals. Consider revisiting whether your trust structures still serve their purpose.
What Can You Do Now?
✅ Review estate documents
Some older wills and trusts include clauses tied to exemption amounts, which may no longer function as intended under new rules.
It’s a good idea to review these documents now to ensure they still align with your family’s goals.
💰 Evaluate large gifts or trust funding
Current tax laws offer higher exemptions for gifts, which could be adjusted in the future.
This may be a good time to consider transferring assets to trusts or family members under the existing limits.
🏛️ Revisit state tax exposure
While federal estate laws may shift, many states still apply their own estate taxes, sometimes starting at $1 million.
Knowing your state’s rules can help you make informed decisions and plan more effectively.
🛡️ Check insurance coverage
Life insurance is often used to help cover estate-related costs without needing to sell long-term assets.
It’s worth reviewing your coverage to ensure it still fits your needs under updated tax considerations.
🏠 Coordinate family business transition
With potential tax efficiencies ahead, this could be a helpful time to revisit your business succession plan.
Clarifying ownership, leadership, and decision-making roles can support a smooth transition over time.
Final Thought
This may be a significant opportunity to strengthen your estate plan with greater flexibility and reduced tax friction, especially under the current policy direction. Taking thoughtful action now can help position your family well for the future.
Use this period not just to save on taxes, but to clarify values, tighten governance, and set up long-term systems that protect your family’s wealth for generations.
With thoughtful planning, these changes can work to your family’s long-term benefit. While the proposed 25% reduction in IRS funding may reduce enforcement pressures temporarily, it’s still important to stay well-prepared. Clear documentation and proactive planning remain key to protecting and passing on family wealth. At Ridgewood, we help clients align evolving tax policy with their estate goals and broader legacy strategy.
Let’s evaluate how these proposed changes may impact your strategy and make sure your plan reflects both today’s opportunities and tomorrow’s intentions.
Here’s to building lasting wealth,
Ken Majmudar, CFA
Founder & Chief Investment Officer Ridgewood Investments
P.S. If you’re ready to explore how our institutional-grade investment approach can work for your portfolio, let’s schedule a time to talk below.
Gain Industry – Level Intelligence For Your Investment Strategy
Transform your approach to wealth building with institutional-grade insights. Schedule a private discovery call with Ken and the Ridgewood team to:
- Analyze your current portfolio positioning
- Explore sophisticated investment opportunities
- Design your personalized wealth architecture
Building generational wealth requires institutional-grade thinking. Let’s discuss how our sophisticated approach can work for your family’s future.
Important Disclosure: Ridgewood Investments is a registered investment adviser. This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.
