Hoarding is a human instinct, but it can skew your priorities as an investor.
Why do those hardcore Christians in America hoard food for the apocalypse?
Have you seen those guys? There’s like one particular tele-evangelist guy – says he’s a priest – that has a cable TV show. He got a bit of attention when Trump was elected because he firmly believed that Trump was God’s favoured candidate.
I would have thought if God was taking sides, he wouldn’t need our help to get his man elected.
[Shock: Divine hand identified in vote-rigging scandal.]
You might know him actually. His name is Jim Bakker. You might remember him from the 1980s, when “Jim and Tammy” (his wife), got convicted for embezzling $160 million from their flock.
And for you other property nerds, he convinced 165,000 people to fork over $1,000 each to help him build a resort at his Christian-themed water park. If they chipped in $1,000, they’d be entitled to a four-day stay in the resort, every year for the rest of their lives!
(The resort was never built.)
Anyway, without his signature hair and a new wife, he’s back on TV. And from what I can tell (and I could only watch so much), his new business model seems to be selling buckets of food to Christians.
Yup. Buckets of food. Buckets that have a 35-year shelf life. You can get curries, pancakes, slop. You name it. You can even get a Mexican themed “Fiesta Bucket”.
(Seriously, who on earth is buying this stuff.)
And for just a few thousand dollars you can buy yourself an 8-year supply of slop. And from the safety of your fortified bunker, you and your heavily-armed friends will be able to comfortably ride out the End of Times.
It all seems to be based on an unconventional interpretation of the Revelation. Normally, it says that the righteous will be raised up into heaven, and the rest of us (I’m guessing I’m probably not on that guest list), will be left to our own devices when the devil is given control of the world.
In Jim Bakker’s cosmology though, the righteous have to endure the Tribulations with all the other sinners before they can hope of being redeemed.
And Tribulations go better with a bucket of slop.
Yeah, nah, I still can’t get my head around this. I just can’t imagine how this makes sense to anybody. You believe in a God that is very picky about who is righteous and who is not, (a list that includes Donald Trump!), that God is very active in shaping the world to His liking, but when it comes time to wrap it up, he’s just going to leave all the righteous ones to their fate, so that only the ones with a big enough stash of slop will survive?
Am I missing something?
I think religions over the years have done a pretty good job of fingering people’s fears. And what I think happens is that our world has become so complex and so complicated, that many people feel an intense kind of fear that they just can’t name. They can’t get a handle on.
But then along comes the tele-preacher and says, yeah, there’s a good reason why you feel scared right now. That’s because there’s a massive wrath-God about to send the whole joint up in flames.
“Oh thank goodness. I thought I was crazy. That just makes so much sense. Better buy some buckets of slop then.”
It is a massive to release to be able to give your fears a name, and it is something that people will pay money for.
Anyway, this isn’t where I was planning on going with this piece. I didn’t plan to sink the boot into Jim Bakker and his sheep – sorry flock. What I find interesting about it is the psychology of hoard = safety.
This idea is primal and deep, but we need to disentangle ourselves from it is we’re going to make it in the world, and particularly make it as investors.
Let me break it down.
Hoarding is a fear response.
If you always believed that whatever you needed would come to you, you wouldn’t hoard anything. You’d just wait for it to arrive.
And I think most creatures on earth live like this. The only animals that hoard seem to be those that live in places with extreme winters, where the sources of food do all dry up. The rest lead a simple life. Eat when you are hungry. Make babies when you are full. Repeat.
Humans, however, hoard all the time. Not just through winter, but all the time. Our hoard instinct is constantly turned on.
And again, I think this comes from living in a world that is scary in ways that we just can’t understand.
Like, we can’t predict if the global economy will be up and running in a year or two, so better save up just in case. Better buy lots of food and weapons, and build up a bank of social credit so I can call in some favours if I need to.
We cannot predict what will happen, so we cannot predict what we will need.
(Spending several millennia growing crops that would periodically fail also probably drove this instinct pretty deep into the psyche.)
So hoarding is a natural response. It tempting to say it is humans being greedy, but I don’t think many people are taking more than they think they genuinely need. It’s just that they don’t know what they will genuinely need, and want to make sure they have a sufficient buffer.
Anyway, in a financial sense, we’re talking about wealth. Wealth is hoarded money.
And again, nothing wrong with that. I like wealth.
But as an investor, there’s something just as important as wealth, and that’s cashflow.
But cashflow doesn’t have an instinct driving it the way wealth does.
I mean, we like cashflow. We can see that it’s useful. We can tangibly get a sense of what it enables.
But it just doesn’t sit on top of an evolutionary drive the way wealth does.
I don’t get a soothing sense of safety out of my cashflow situation. But when I look at my bank balance, I breathe a sigh of relief.
(Ahhh. So many buckets of food right there.)
So where wealth accumulation is given a helping hand by our instincts, our drive to build cashflow is a little more naive, or pure. We’re like little birds, just eating the bugs as they come, when they come.
Cashflow comes when it comes. The seasons turn, rental income comes in.
But I think this difference helps us understand why most investors don’t give cashflow enough attention.
I mean, most get there eventually. After you’ve lost a few deals because you don’t have enough serviceability, you start to appreciate cashflow.
But when we’re starting out, most of us just aren’t giving cashflow the attention it needs.
And I think that is why many investors stumble three or four years into their journey.
If they’ve put all of their energy into wealth, and haven’t created any cashflow, they’re not really getting a first hand taste of the benefits. They’re stashing benefits away for a future self, but there’s nothing for them in the here and now.
You need cashflow to keep you nourished. It is a gift you can give yourself, either through some nice things, or best of all, free time.
Wealth is great, but cashflow is the juice of the here and now.
And since it is the juice of the here and now, it is in the realm of abundance.
When we’re focusing on cashflow, we’re closer to the birds and animals, just trusting that the rains will come, and the fruits will grow.
But as I’ve said before, the human is unique because it straddles time. It lives in the here and now, but must also live in the future as well.
And so there needs to be a balance. A balance between the here and now, and the future. A balance between the hoarding of wealth and the spending of cashflow.
The only point I want to make is that our drive for cashflow just doesn’t have the same biological drive that wealth has. So, left unchecked, we can naturally end up a little out of whack.
So my recommendation is, give a little more thought to your cashflow situation. In your mind, try to see it as just as important as your levels of wealth.
This is the ticket to being a harmonious and successful investor, I think.