I admitted recently that I’m cheap (but not as cheap as Morgan and despite me writing that in public he texted to say we’re still good), so it might have seemed out of character to buy a scoreboard ad at Mizzou promoting Unqualified Opinions. After all, I wrote way back when that if Permanent Equity ever bought a Super Bowl ad, it would probably mean that Permanent Equity had lost sight of what made it Permanent Equity.

The point was and is that it’s a privilege to be in a position to allocate capital, so if you find yourself in one, you should do it wisely.

But buying a scoreboard ad at Mizzou to promote Unqualified Opinions is a questionable capital allocation decision, at least when you look at it in a spreadsheet. That’s because, since Unqualified Opinions isn’t trying to convert you into any kind of paying relationship, the ROI on paying anything to acquire Unqualified Opinions subscribers isn’t very good.

Why’d I do it?

Someone told me way back when to never borrow to buy a depreciating asset. And that’s good advice. Another recommended saving aggressively, but also never holding cash in excess of what’s needed for an emergency fund when there are appreciating assets one can buy instead (remember it’s time in the market, not timing the market, that matters). And that also makes sense. But a third, acknowledging those two recommendations, advised me to think long and hard about how I might think about spending on memories and experiences within the context of that guidance.

In accounting, when it comes to spending, there are two kinds: expenses and expenditures. Expenses are things you pay for that you also consume in relatively short order and therefore provide minimal long-term benefit. These are deducted from revenue on the income statement in order to calculate profit. Your net worth typically goes down when you spend on an expense.

Expenditures, on the other hand, are things you pay for that become assets on your balance sheet because they are expected to provide value for a long period of time. Buying a home, for example, is most likely an expenditure. Your net worth typically stays the same or goes up when you make an expenditure.

So which is buying a scoreboard ad at Mizzou to promote Unqualified Opinions? Here’s where context matters…

The opportunity to buy a scoreboard ad at Mizzou only arose because my son’s swim team needed sponsors to help fund a meet they were hosting for 60-plus teams from across the state. Despite working hard to find some, they were falling short of the necessary number. And that makes sense because if you’re a business viewing this as an expense rather than an expenditure, it’s a questionable capital allocation decision.

For me, though, there was also the opportunity to help fund the valuable experience of the swim meet for my son as well as the chance to have the shared experience (with our content team) of creating a scoreboard ad with a dot in a spreadsheets hat floating in the pool in a flamingo inflatable. And that’s a memory that will always make me laugh. 

And what are valuable experiences and memories that will always make you laugh? Those are pretty valuable assets to put on your balance sheet.

Welcome back to season 4.

– Tim

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