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What’s the Point of Owning All This Stuff?

Learing to value your portfolio helps clean out the 'bad'stuff

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When my wife Jo and I decided to sell our home in Illinois, the first question we asked ourselves was, “What are we going to do with all our stuff?” Somehow our children, neighbors, friends, the Salvation Army, and a moving van would have to magically make it disappear sometime before we closed escrow at the end of the month.

My many theories about stuff have proven to be true over the dozen or more homes I’ve lived in during the last 73 years. First off, no matter the size of the home, it’s always full of stuff within five years. When we sold our home in Pensacola along with all of its furnishings, we managed to fill the next one to the brim in no time flat.

When we pack up a house, we often pause and hold up nostalgic items, fondly remembering a trip or event. Souvenirs are supposed to remind us of good times, but not everything fits that bill. We have everything from the newest TVs right on down to outdated technology hidden somewhere near the treadmill or in a guest bedroom. We even have a spare refrigerator in the garage. We use most of this stuff, other than the television in the family room, for less than ten hours each year. It’s no wonder the damn things never wear out.

Most of the stuff that is important to us means very little to our children. Having cleaned out three homes that belonged to older family members, I can safely say that everything worth saving can usually fit into a Ford Explorer. The rest ends up at the Salvation Army or Goodwill, and a small amount of furniture is quickly dispersed among family members. For most folks, their children are well situated by the time their last home is cleaned out. There may be a few things the kids want, but little they need.

Jo and I have friends who’ve considered downsizing, but the thought of having to deal with decades of accumulated stuff is downright scary for them. Some of our friends have off-limits basements or storage areas where guests are not allowed. They’re simply too embarrassed by the endless boxes and piles of stuff.

That’s why I’ve come up with a “stuff grading system,” to help us all rank the goods accumulated over a lifetime. A similar outlook holds true for our investments as well.

Really Good Stuff

This category includes anything appreciating in value. One may not have bought it as an investment, but it turned into one. It could be a coin collection, gold jewelry, artwork, Matchbox cars, or other type of collectible. Take good care of these items; one may need to sell them down the road. But for now, hang on to them, these are like the investments that Warren Buffett says he will never sell. You want to have a few of these in your portfolio to give you income and share price appreciation so that when the time comes—and you’ll know when that is—you have something of value that will fetch a substantial sum of money.

Good Stuff

Good stuff includes anything we use regularly or still need. The TV in the family room, the good silverware we pull out when family comes at Christmas, and tools in our workshop all fit the bill. At the same time, I should confess that I don’t need six socket wrenches or three electric power drills. Too much good stuff can quickly turn into bad stuff.

In my portfolio this tends to be stocks that are making me money for the moment, either through gains in share price or dividend payments. I won’t hold them forever, but for now they are tools to increase my assets. You probably have some in your portfolio, too. They’re not the “next locked-in 1,000% winner,” rather the more modest double-digit gainers that you’ll cash out of when you’ve fully maximized their value. For me, very often dividend and income investments fit this bill.

Bad Stuff

Bad stuff includes all those possessions we never really use or need. When I pulled the radio out of my truck and replaced it with an in-dash navigation unit, I stuffed the old radio in a garage cabinet, and it’s been there for the last three years. My wife has a wonderful vacuum cleaner, yet whenever she goes into the closet, she has to move the old one to get to it. You get the picture; we all have stuff that simply gets in the way.

Would we be better off selling a lot of it at a garage sale? Probably. A neighborhood garage sale is a fantastic stuff transfer station. They work well as long as you’re a seller and not a buyer. Otherwise, the Goodwill or the Salvation Army is your best bet for bad stuff.

Any investor who has held a portfolio for a number of years has had his or her share of “bad stuff” stocks. These are the ones that we held too long and watched all our gains evaporate, the hot tip from our brother-in-law who turned out to know nothing at all about investing, or even the mutual funds we bought when we were young because we saw the previous year’s gains and thought past performance indicated future results. No matter how we got the stocks, eventually we shoved them into the garage cabinet of our portfolio hoping to one day they’d come back to life and we could move on.

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