Building an Index Based on Your Interests/Lifestyle

[Edubb20]

I've decided to pick 20-25 stocks based on my lifestyle and the purchases I make.  I'm not doing any guessing or complicated predictions. It's only allowed to be 2-5% of my net worth

I mostly doing this to:
-Influence the world with my money in a small way that feels lacking when I buy broad indexes.
-Lean into my life choices, or highlight things that I maybe shouldn't be so willing to support with my spending.

So far, it's kind of neat because I feel like I'm looking at my own consumer snapshot which, because I'm a human with many needs, forces some level of diversification:


This dude uses X financial institution, plays X videos games by this gaming company, uses X technological ecosystem,  Drives an X, shops at X chain of grocery store etc... etc...


Any one else do this?

[ixtap]

I started investing in taxable about the time Motif was launched, so I started like this. I mostly feel rather stuck with a variety of stocks after tax loss harvesting what I could at appropriate times.

[CBECH22]

This sounds like a neat idea and could be easily completed in my M1 portfolio as a 5% or less slice.  I kind of want to put one together now and see where it goes lol. 

As ixtap mentioned above though, I feel like I could definitely get stuck with some companies I won't care for in the future with some unrealized losses, that will be sitting there waiting for me to sell.  Who knows though, with it being such a small percentage!

[clarkfan1979]

I've decided to pick 20-25 stocks based on my lifestyle and the purchases I make.  I'm not doing any guessing or complicated predictions. It's only allowed to be 2-5% of my net worth

I mostly doing this to:
-Influence the world with my money in a small way that feels lacking when I buy broad indexes.
-Lean into my life choices, or highlight things that I maybe shouldn't be so willing to support with my spending.

So far, it's kind of neat because I feel like I'm looking at my own consumer snapshot which, because I'm a human with many needs, forces some level of diversification:


This dude uses X financial institution, plays X videos games by this gaming company, uses X technological ecosystem,  Drives an X, shops at X chain of grocery store etc... etc...


Any one else do this?

I buy rentals based on my lifestyle.

[MustacheAndaHalf]

You should read "One Up On Wall Street" by Peter Lynch, the legendary investor who ran Fidelity Magellion for many years.  His approach wasn't focused on his lifestyle per se, but he would get ideas from observing businesses in person.  He would also thoroughly analyze company financials & balance sheets, but the ideas were driven from what he saw outside Wall Street.

[daverobev]

Something I tried to do, or at least started to do, was to buy shares in companies that would give me back in dividends basically what I had to pay them a year.

Good examples would be gas and electric - my plan at the time was to buy oh say $10000 in Enbridge shares which were probably yielding 6% at the time, to pay my heating bill. Add another $10k in Hydro One to give me $450, $500 for my electricity bill. Add $3000 of cellphone company shares... you get the idea.

In theory as the company raises prices, its profits go up, its dividends go up = no effect on me. Of course Enbridge is just the pipeline company, the price of the actual gas wasn't really related - just a pass through expense. Supermarkets, as well...

[BOP Mustache]

I like the aesthetics of properties but I also like trains and planes and buses so I’ve made my own infrastructure index fund for myself.

Like you, approx 5% of our investments but it’s my own little index fund of companies that I like and can walk/bike/drive past and go ‘oooh look kids we own that’ pretty cool as a big shipping port is where we go a few times a month in the vicinity so nice to know we own part of it. I used to stock pick but now I just hold the companies I like but in their index weighting. The emotional roller coaster of stock picking winners was too much to handle. By having the index weighting of the companies it takes the emotional attachment out of it for me but I still get the benefit of choosing the companies.

The other 95% is in a low cost world index fund.

[ChpBstrd]

I'm not sure I see the point.

Is one investor's allocation expected to make other companies' stocks a penny cheaper than they would otherwise be? Are hedge funds, algorithms, and high frequency traders going to let that penny mispricing persist for more than a minute? Is that going to change the external world for the better, or even affect the companies involved? Is there something about the companies you trade with that makes them less evil or destructive than others?

Is owning shares in the companies you trade with really going to make you rethink any purchases, or will it become a (faulty) rationale to justify more spending? E.g. "I own TM stock so if I buy a new Toyota some of that profit comes back to me." or "I own shares in Gap so by buying fast fashion I'm supporting my own investments." If you want to rethink purchasing behavior, why not just use Mint or Personal Capital to analyze your spending categories each month, or to identify specific transactions you regret?

An additional problem is that your AA is probably loaded up on consumer staples and consumer discretionary. Are you considering your consumption's impact on the suppliers of the companies that sold things to you, such as raw materials, agriculture, transportation, business equipment and software, energy, etc? E.g. what about Mosaic, a company which supplies fertilizer to the farmers who sell the food to the wholesalers who pay the transporters to deliver the food to the grocery store where you shop? How many levels deep do you go?

[vand]

These sort  of "I like to stock pick but not in an amount serious enough to make any more than a rounding error" come up all the time, and my answer is always "whatever floats your boat."

It's not worth meaningful discussion if you don't have the conviction to put meaningful amount of money behind it, all that happens is you get into a multi-page thread about 2% of your wealth and don't talk about the other 98% - tail wagging the dog somewhat

[clarkfan1979]

These sort  of "I like to stock pick but not in an amount serious enough to make any more than a rounding error" come up all the time, and my answer is always "whatever floats your boat."

It's not worth meaningful discussion if you don't have the conviction to put meaningful amount of money behind it, all that happens is you get into a multi-page thread about 2% of your wealth and don't talk about the other 98% - tail wagging the dog somewhat

Agreed.

[dragoncar]

All in on chicken pot pies

[BicycleB]

All in on chicken pot pies

lol

***

I never heard of the OP's idea on a portfolio level, but I see the logic. @Edubb20, are you going to track the portfolio's results and compare them to VTI, maybe showing results quarterly on this thread?

You could put the data in a Google Sheet and link it here, with posts summarizing updates. Then we'd all see how it goes, and you'd know whether a full portfolio of that type turns out to be safe.

[Scandium]

My reaction:

[Edubb20]

All in on chicken pot pies

lol

***

I never heard of the OP's idea on a portfolio level, but I see the logic. @Edubb20, are you going to track the portfolio's results and compare them to VTI, maybe showing results quarterly on this thread?

You could put the data in a Google Sheet and link it here, with posts summarizing updates. Then we'd all see how it goes, and you'd know whether a full portfolio of that type turns out to be safe.

100% willing to do this!

[GilesMM]

I’ve always like the Apple ecosystem and lifestyle. Looked at the stock in high school. Bought a Mac in college. Bought stock when the iPod came out. Been good to me. Same with Google. I used the search engine since it was launched and always liked the stock. Been good to me.