Back in March, my friend Barry Campbell and his wife started investing in their own White Trash and Minor Vices Portfolio.

As Barry explained:

Everyone says “invest in what you know.”

I’m about to put my money where my big mouth is. Carrie and I invest, mostly in index funds and ETFs, every month through Sharebuilder, which allows fractional purchases of shares in stocks and funds for a flat monthly fee.

The vast majority of our modest monthly stake goes into a total-market index fund and an aggregated bond fund.

But I’m going to make a modest investment in a stock portfolio — a mini-fund of my own making, if you will — called “White Trash and Minor Vices” (motto: don’t beat your wife, beat the Dow) the constituent stocks of which are:

• BFB - Brown-Forman Corp. Cl BHolding company for distilleries that produce Jack Daniel’s, Early Times, Canadian Mist, Southern Comfort, Finlandia, and others. Recently acquired a major stake in a Mexican tequila manufacturer.
• BUD - Anheuser-Busch Cos. Inc.Brewer of cheap domestic beer; owner of theme parks.
• CHB - Champion Enterprises Inc.Major manufacturer of mobile homes and modular buildings.

For Barry’s description of the whole portfolio, click here.

How are they doing?

[November 8, 2007] The market has its ups and downs, but White Trash just keeps on gittin’-r-done.

Since its inception in March 2007, the White Trash Portfolio is up 11.1%.
…Over the same time period, exchange-traded funds (ETFs) tracking the major indexes performed as follows:

• DIA, which tracks the Dow Jones Industrial Average, is up 6.9%.
• SPY, which tracks the S&P 500, is up 3.2%.
• VTI, which tracks the performance of the broad US stock market as a whole, is also up 3.2%.
• IYC, which tracks the Dow Jones Consumer Cyclical index, is down 6.5%.

Go Barry!

Venture capitalist Howard Morgan long spoke of the “Four P’s” of sizing up a business for potential investment: People, Product, Plans and Profits. Later, he added two more:

Starting about 1996, when I was a lead investor in Idealab, I was inspired by Bill Gross to add a Fifth P.

Passion - the entrepreneur must exhibit real passion for the idea, since he or shee will be giving up some of their personal life to make it happen, and needs to believe strongly in what they’re doing.

More recently, as I’ve begun to reflect on the Way Too Early theme of my investing career, I’ve added the 6th P

Persistence - the ability to stay with it through all the many setbacks that happen during the long time it may take from idea to profitable execution.

Full article here: The Sixth P in “Way Too Early”

Some of you will be going into business. For that you need two eyes. With one eye you have to check accounts receivable and accounts payable, overhead and profit margins, payroll and insurance costs. With the other you have to attend to your employees – are they receiving just reward for their labor and can they find fulfillment in their work, and you have to think of your clients – do the products or services that you provide enhance their lives rather than diminishing or debasing them. One eye is not enough.

– Nicholas Wolterstorff, in his Commencement Address at Calvin College, May 20, 2006.

Wolterstorff is Emeritus Professor of Philosophical Theology, Yale Divinity School, former Professor of Philosophy at Calvin College, and a member of the Calvin College class of 1953. Though Wolterstorff doesn’t mention the Balanced Scorecard by name, I suspect he would find it sensible.

Link to full text: Wolterstorff Commencement Address at Calvin College