“Well that’s fantastic. A really smart decision, young man. We can put that check in a money market mutual fund, then we’ll re-invest the earnings into foreign currency accounts with compounding interest aaaand it’s gone.” – South Park
I’ll have you know there are at least three things that you can use an empty potato chip bag for.
I was reading Bison Prepper (LINK) (and you should, too) last week when Lord Bison mentioned that stocking up on things that you used regularly as consumables was a survival strategy. It is. Beyond that, it’s also an investment strategy.
In the world of investment, when you buy a stock thinking the price is going to go up, it’s called “going long.” If you were to buy Apple® stock thinking that the world hadn’t had enough iPhones®, iPads©, or iCrap™, you would be “going long.” For this strategy to pay off, when you finally decided to sell Apple©, it would have to be worth more than when you bought it. Buy low, sell high.
Duh.
But I started this post by writing about consumables. What’s the deal? Those aren’t investments, right?
I recalled reading another article a few years ago about a financial writer showing up on the Tonight Show™ with Johnny Carson, so I looked for the interview and found it – a whopping 200 people had watched it, even though it had a glimpse of Susan Sarandon while she was still cute and before her eyes popped out of her head like they were trying to escape. The writer that Johnny was interviewing was Andrew Tobias. Johnny said in passing: “I like how you said that if you had $1000, you should invest in tuna.”
I was really shocked when he said, “Sit on it.”
Tobias responded: “If you want to make 40% tax free on $1000 you can . . . if you buy tuna fish . . . and shaving cream on sale, and get a case discount.” The audience didn’t laugh – they were living in pretty uncertain times and the advice was serious.
Andrew Tobias posted this clip on YouTube®, and was really irritated with himself – since his jacket was buttoned it looked like he was forming a human air scoop as he sat down with Johnny.
Back when this clip was filmed was in the late 1970’s, and the economy was in trouble. The interest rate was high – a mortgage (if you had great credit) would charge you really high rates, between 10% and 14% . . . compared to a tiny 4% or so today. Inflation for nearly everything you could buy was running around 10%.
The entire key to making this odd investment strategy work is that you have to buy things that you’ll actually use. Sure, Wal-Mart® sells five-gallon troughs of flaming pickles soaked in Cheeze® Ballz™, but will you actually eat that?
It was even worse when she flipped off people we passed.
What’s a list of things that most people buy that this would work for?
- Tuna (and long shelf life canned food) – especially good if you need to keep your mercury intake up.
- Shaving cream and razors – buy extra if your wife is a Kardashian or you’ll look like you’re married to a Chia Pet™.
- Various condiments – mustard keeps forever, and can be used to slow Kardashian hair regrowth.
- Laundry soap – I have to keep this on the list, my hands are Tide®.
- Paper goods – I’ll make a toilet paper joke, since I’m on a roll.
- Wheat, rice, and other grains (properly stored)
- Honey – They’ve found 5000 year old honey that is still edible, so it probably gets the nod as the most stable food ever. Plus it’s really handy to have local honey if you’re in Russia – I hear it’s made there by cagey bees.
- Ammunition – Don’t be like JFK and have this be the last thing on your mind.
Now, you should be smart about this – if your family won’t eat cans of clams, buying them when they’re super cheap won’t really help you because then you have cans of clams that no one will eat, until there’s a food drive, and then you give them the clams. If this sounds oddly specific, well, we don’t have canned clams anymore. Likewise, if you decide to grow a beard, six cases of shaving cream suddenly become worthless until you decide to shave again.
The Mrs. didn’t buy the line, “But she looked so lonely, like she could use a good home.”
And don’t be nutty. If you live in a tiny house, putting several thousand cubic feet of tuna and wheat might not be the greatest idea. Unless you like sleeping on cans of tuna. There’s a limit. When Tobias gave that advice, he suggested that it could be used for $1000 worth of stuff. Today that translates into about $4,500 worth of stuff, if the inflation calculator is to be trusted. That’s certainly a lot, and would translate into 20 or so tons of wheat, but you’d probably have to stack hide some of it under the bed.
One dangerous point: if you buy something, like, say, wine and get a 10% case discount, it doesn’t really help your cause if you drink the wine twice as fast. Or if when you see a Ding-Dong®, you immediately rip open the silvery plastic sleeve and try to suck out the “cream” filling until you are sitting in the corner in a sugar coma. So you might want to reconsider stocking up on things where your self-control will turn a savings into a disaster for your liver or waistline.
9 out of 10 doctors recommend water over alcoholic beverages for health reasons. The other doctor is from Flint, Michigan.
In the 1970’s, you could do this strategy with nearly anything since prices were going up on everything, as long as you didn’t have to borrow the money – interest rates on credit cards were 18%. As opposed to the 18% today. Hmmm.
Regardless, if you have high-interest debt, get rid of it. The sooner the better. The future is uncertain, so getting rid of debt is a certain way to be in better financial shape.
In the last decade, inflation is most prominent in two things that you can’t collect like tuna: health care and college tuition. Oh, sure, you could pre-injure yourself, but who has the time? Likewise, you could avoid steep college tuition hikes by sending your three year old to college, but that would make congress unhappy. They hate competition that’s smarter than them.
The best information that I can find is that 401k plans returned an average of 7% for the last five years. Better than a jab in the eye with a sharpened terrier, and probably still a smart thing to do. I have one. The beauty of mine is that my company kicks in an instant match – and whatever match I get is an immediate return – if the company matches dollar for dollar, it’s an immediate 100% return. If it “only” matches $0.50 on the dollar, it’s still an immediate 50% return. I’ll pay taxes on it after you begin to pull it out, assuming that it hasn’t been confiscated by Bernie Sanders to fund his “waterslides for the poor” initiative.
But the 401k immediate return is hard to say no to.
For me? I’ll take belt sanders over Bernie Sanders any day.
But I can easily make 30% to 40% return tax free on toilet paper, if i buy it on sale, and in bulk. And I’ll never pay taxes on that return. It’s just free money – again, assuming I don’t have any debt.
If I have a mortgage of $100,000 at 4%, and I pay it off, I’ll make a $4,000 return before taxes. Not bad, but after taxes, it’s really as low as $2,000 depending on the rest of my income. But if I get a sweet deal on non-dairy gluten-free vanilla creamer, I get all of the money I save.
There is one other advantage of putting some of your money into stuff that you’d use – you’re making yourself more resilient. If the dollar (the United States one, not one of the phony dollars they use in places like Zimbabwe or Philadelphia) were to weaken, you have investments in things other than dollars. I heard a story of a German boy who got a gold coin as a tip while working at a hotel. After the hyperinflation of the Weimar Republic, that same German boy was able to buy the same hotel for that same gold coin. Of course then it became a target for B-17 bombers, but who’s keeping score?
Oh, yeah. Everybody. Except the French – they’re waiting for their record to improve.
A French border guard was questioning a German. “Occupation?” “No,” replied the German. “Just visiting.”
The idea that I’m trying to convince you of is that you should think of your average daily purchases as if they were investments – because they are. It’s not only stocks, bonds, precious metals and a 401k that are investments – what you buy on a day to day basis and how much you pay for it can also be an investment.
The other thing that many people overlook when they think of investments is their time. How are you spending yours? You can, like me, spend your time in a PEZ®-addled haze, watching Bojack Horseman™ on an endless Netflix© loop, or you can spend it productively, making yourself better. That’s tax free, too.
Remember, investment means more than stocks and bonds. It’s the things you buy, the way you spend your time, and avoiding B-17 bombers by not buying German hotels.
Here’s the consumables you should stock up on for future appreciation – rhodium and palladium!
https://www.marketwatch.com/story/why-palladium-prices-keep-hitting-new-highs-and-rhodium-has-already-rallied-by-30-this-year-2020-01-17
Keep an eye out on the catalytic converter in your car….they’re going fast!
https://www.koin.com/news/crime/ppb-dramatic-increase-in-catalytic-converter-thefts/
Ahh, stealing those again . . . at least it almost looks like work . . .
Owing to a rather high concentration of Scotch in my blood(lines), I’ve always been a saver (‘TwoBuckChuck’ ain’t just a clever username). But haunted, too, by the realization that in an economic collapse, such as has happened any number of times elsewhere during my lifetime, I would find myself in the same leaky boat as every self-indulgent spendthrift who at least got to enjoy his sybaritic lifestyle for a time.
I have a brother-in-law who makes unbelievably good money in some financial racket (Wall Street, or human trafficking or some other smarmy enterprise – I really don’t know). He and sis-in-law have always rented homes instead of buying, and they rent the most palatial estates I’ve ever been permitted to trespass on. They also lease high-end sportscars and travel extensively. We, on the other hand, bought a modest shack early on and only graduated to middle-class respectability over the course of decades, careful never to buy more than we could easily afford. We drive old beaters and most of our vacations through the years have been long weekends imposing on relatives.
As a result, we have amassed a bulging portfolio, on paper at least, of goobermint-backed promissory notes, while BIL and SIL live essentially fat paycheck-to-fat paycheck with next to nothing set aside for their golden years. Their rationale is that they are LIVING their golden years right now.
In a Weimar-level apocalypse, we are all losers. But they at least lived the good life while we sacrificed and saved for an uncertain future. I always assumed we would have the last laugh, but today I am not so sure. Once the dems return to the White House to impose their confiscatory economic policies on the rest of us, I may well regret not having “invested” in a round-the-world cruise or two and a couple of Bentleys for the garage.
I’m with you. I sometimes worry that I’m playing a video game, and saving up all the cool ammunition and weapons for the big boss, and then finding out I didn’t need them. And I could have had so much fun with them earlier in the game . . . .
I was listening to an acquaintance about talking how they thought gold was the best investment. They didn’t like it when I asked if gold was good on a sandwich. Of course, they’re not nearly as pessimistic as I am about their fellow humans.
You can’t eat gold. And, if it happens like last time, the price of gold will initially collapse as the economic crisis hits. Stockbrokers can’t eat gold either.
As a former 401k professional managing hundreds of millions of dollars in defined contribution assets, I can say (without providing investment advice in any way.) that it is a great investment vehicle for America of 20 years ago. If things go sideways, a six figure balance that only exists in a computer somewhere? Not going to help. I have income streams now outside of the worst of the Matrix so we should be good as long as the whole thing doesn’t collapse but when it does collapse? That is where I concentrate on now. Believe it or not, I can do without internet and smart phones and 2 day delivery from Amazon but I can’t do without a lot of stuff, starting with water and food and shelter.
The smart investment strategy in the 2020s focuses on reducing your outstanding debt and investing in tangible assets that will keep you alive.
I’m with you on both of those things. And really nice things will be cheap when the levee breaks . . . unless we all get flooded.
I don’t know how to use belt sanders, and I have no use for Bernie Sanders
I’ll go with Colonel Sanders.
I was going to write that, but I didn’t want to come across as chicken.
Can’t say that I blame you. After all, as our host, I’m sure you don’t want to be accused of fowl play.
Now that makes me feel like a turkey!
Jess,
Spot on. I have commented to many of the ” you need to have a supply of gold ” folks that when civlization breaks down, three things will be important: water, ammunition, and toilet paper. Canned tuna should be next on that list, I think.
TwoBuckChuck,
Are there new beaters? 😉
I can think of three reasons not to own gold: 1> you can’t eat it, 2> you probably can’t protect it if thieves follow you home after you cash in the first coin when you really need it, and 3> you probably can’t protect it if the Federal government comes looking for it (again, as they did in 1933 with Executive Order 1602).
Gold is for kings, who have an army to protect it. Silver for bankers, with a guarded vault. Copper for the merchant, and steel for the workman (knives, chisels, saws, hammers, etc.). Debt is for slaves.
Last four words are priceless.
As is preparation now.
Great advice. Right now we’re working on investing in agriculture. All those years spent turning the back 40 into a wildlife haven have come back to haunt me.
And in honor of your dry goods jokes:
Q: So why did that roll of toilet paper roll down the hill?
A: To get to the bottom.
Wildlife is also food. Deer are nature’s way of converting leaves and acorns into food.
Ha! Looks like it was batting cleanup.
Things you can stock up on for the zombie apocalypse: Canned goods (especially meats like tuna, SPAM, and chicken). Dry goods (pasta, flour, rice, beans, peas). Paper products (keep sealed, because it does go stale). Ammunition in common calibers (.22LR is a viable currency). Tea, coffee, powdered creamer, and sugar. Powdered milk. Salt. Water purification supplies. Unscented bleach (also a water purification tool). Cooking oil and lard (keep sealed and in a cool, dark place). Batteries. Candles and matches. Charcoal and propane. Vitamin pills (keep sealed and cool). Shaving gear. Soap and shampoo.
Thanks for all the suggestions. I’ve been living frugally most of my life. The most spendthrift thing I ever did was to marry my husband. However, he has become more frugal over the years.
If you want to find the best deals in multiple stores, try the Flipp app for your phone. Does an outstanding job of finding the cheapest sources.
The absolutely best advice I ever received about money? Leave your cards/wallet/checkbook in the car when you go shopping. The time to return to get it allows you to get away from the hype that drives many impulse purchases. Also, allows you to ask yourself: Do I REALLY need this?
And online? I make sure that (unless it’s a slam dunk) it stays in the Amazon cart at least over night. And NEVER drink and shop, unless you want to make your Amazon delivery like Christmas . . . “OH! Look what I got myself!”
“Don’t drink and Prime” is the sage advice given me by my son after becoming my own Secret Santa recently. A preacher curl bench arrived on the porch last month, and I innocently remarked, “Ya know, I was JUST thinking about getting one of these the other day!”
Ha! It’s like playing the home version of Memento.
Yes. Salt. Very good one.
I would add liquor, in a variety of flavors and bottle sizes, to your list.
shampoo
Becasue we couldn’t get any real poo. One of the best jokes on television ever.
For real poo, just watch the shampeachment coverage.
George Carlin, right?
From MASH. IIRC, an old girlfriend of Hawkeye comes to the camp. Hawkeye and BJ take her some welcoming convenience items. As they are showing what they brought, Hawkeye holds up a bottle and says, “shampoo.” BJ immediately says, “Because we couldn’t get any real poo. ” One of the rare times he got the best line.
Ahh!