Lifestyle: Are Your Personal Tastes A Sound Investment Strategy? Wherein I create The 'Only Pay Yourself' Strategy.

I’ll be the first to admit it, I have not made the wisest of investments over the years. From cashing out my retirement to help fund my start-up, to keeping cash reserves in low-interest bearing accounts; over the years I’ve made about every investing mistake in the book. What I did invest, I invested cautiously. Mutual funds, index funds, foreign index funds. I gambled on some of the big internet companies that came up over the years, and sometimes it paid off, sometimes it didn’t. So I’m proposing an experiment, and I’ll be following through with it starting May 1st (coincidentally my birthday).

*From this point forward, I’m only going to purchase products from corporations I own a part of. *

I call it the “Only Pay Yourself” strategy (OPY). The theory is this, if you’re going to pay a corporation for their goods and services, then it makes sense that you’d believe in their quality and long term viability. Is this inherent belief in the worth of a product or service useful in a market strategy?

Pay Yourself First, Last, and Only

PayYourselfFirst

I’m setting up a new brokerage account just for this experiment, and starting May 1st 2013 I’m going to literally put my money where my mouth(‘s food) is (coming from). I’ll be keeping track of the entire thing, and logging with metrics. Just like my open-source software and its subsequent income, I’ll be writing the whole thing up.

Read on for the details!

In the past, I thought that my lifestyle experience would alter my stock purchases for the better. Perhaps they did, but my return rate wasn’t any better than with a good CD. Will OPY fare any better? What if my stock performance begins to alter my lifestyle? Will I gravitate towards items whose manufacturers are doing well in the market? Will my tastes correlate to a sound investment strategy? Who could I become, if I intertwine my financial decisions with my personal ones. For me, that’ll be the most interesting aspect of this experiment, how it changes my day to day purchasing decisions.

Due to the sheer amount of companies whose products I already own, I’ll be having to work my way through the backlog of stocks to purchase. As this will all be on a new account, I’ll be able to export metrics, graphs, and performance tables for everyone to see and play around with the data sets.

This (OPY) strategy actually covers a huge range of purchases and goods, both seen and unseen, examples include:

  • coffee (especially when I’m on the road or at a client site)
  • gasoline
  • (natural) gas
  • protein powder
  • the company that refines the chromium perchlorate I put in my smoothies
  • the company that makes the notebook I use
  • my phone company
  • my internet service provider
  • the company that Trader Joe’s outsources to make my dog’s food
  • Trader Joe’s itself
  • other grocery stores
  • the drug store where I get my licences renewed
  • the company that makes the furniture in my house
  • the company that makes the TV I watch at night
  • the companies who make game systems I play
  • the companies who make the games I play, and the movies I watch
  • the companies who make the car/motorcyle I drive
  • the company who makes the chipset in my computer
  • the diner I like to eat at, mostly around 1am
  • the liqueur I (infrequently) drink

I’ll be twisting the classic rule of thumb “Pay yourself first” a bit from it’s original intent as a call to save money, to a more aggressive “Only Pay Yourself”. For are we not creatures of habit, who are prone to making repeated purchases for life? Why not make even a small fraction of your purchase back as a dividend? Why not let your taste determine the fate of a company?

There are, however, a couple of exceptions:

  • I buy a lot of secondhand goods at Goodwill, which is a 501(c)3 non-profit. I like to support non-profits and buying second-hand is a great way to save money and help reduce consumption
  • Local merchants (say, a local coffee stand). If they use beans or milk from a publicly traded company, that’s fair game.
  • Private companies where an alternate product is not available. (For instance, The Space Needle is a privately traded company)
  • My local CSA (support shared agriculture!, it’s a whole different kind of hacking!)
  • Food Co-Ops (though I will be a member, they are generally not interest-bearing and not part of an investment strategy, more like a private club or half-charity

I’ll be kicking things off May 1st, and writing things up as I go.

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