On Being Opportunistic
Last weekend was the Berkshire Hathaway annual meeting. If you’ve never heard of it, it’s a huge event in Omaha Nebraska, often called “Woodstock for Capitalists”. It’s put on annually by Berkshire Hathaway, and the stars of the show are (of course) Warren Buffett and Charlie Munger.
I was glued to a screen for a big chunk of my Saturday, watching the annual meeting.
If you have any interest in investing, I highly recommend taking the time to watch the livestream while it’s still available. Buffett and Munger are some of the best investors the world has ever known, and they definitely deserve your time.
I’ve read every Berkshire Hathaway annual report since Buffett took over the CEO position in the early 70’s, and I’ve also watched or read transcripts from the most recent 20 years of annual meetings.
(Incidentally: The Buffett Partnership letters are also an incredible resource for budding investors. Buffett has never published his private partnership letters in a public manner, and you definitely won’t find them on the Berkshire website. Nevertheless, if you like investing, they’re worth your time.)
Anyway, I digress…
This year’s meeting was similar to previous years — Buffett and Munger sat around drinking cola (for 6 or 7 hours) and answered questions about life, investing, and everything else.
This year, Buffett and Munger kept repeating something that really intrigued me — They kept saying “We’re just opportunistic investors”.
Meaning, they wait patiently while looking for the right investing opportunities. When those opportunities finally appear, they jump on those deals with that massive pile of cash (about $90 billion at present).
Looking back at Buffett’s track record, it’s clear this kind of behavior has been extremely successful for him…
It got me thinking — If this works in investing, could this kind of opportunistic behavior be expanded into other areas of life?
I think so! I was able to think of several areas where opportunistic behavior can improve your finances outside of investing.
Let’s take a look at a few of my favorites…
Food Opportunism
When it comes to retail food purchases, my family tends to be extremely opportunistic. We like to keep our food budget low, but still eat very well. When eggs go on a sale at the grocery store, we eat eggs. When cabbage goes on sale, we eat cabbage.
We try not to be fussy eaters, and simply take advantage of great deals when they happen. This is one of the tricks we use to keep our food costs low — If it’s not on-sale, doesn’t have a coupon (or other discount), then we try not to buy it. Period.
There’s always going to be another sale or promotion. If it’s not the sale you want today, just wait… eventually it will go on sale.
Being patient and waiting for these discounted opportunities can save you big money!
When the discount is especially large, we try to stock-up. There have been times when our fridge is filled with 5 dozen eggs, ten pounds of ham, or several heads of cabbage.
Using it all (or preserving it) is the key to taking advantage of these kinds of opportunities. Being creative in the kitchen certainly helps, along with a chest freezer. It may not be feasible for certain kinds of perishable goods (like lettuce or herbs).
Taking advantage of seasonal price swings is another way to be extremely opportunistic with the food bill. Our modern global economy can produce just about anything at any time of the year, but that doesn’t necessarily mean you *should* be eating it all year round.
In general, being opportunistic with food means sticking to what’s in season. Right now, strawberries are in season and our family is eating a ton of strawberries right now. Good thing they’re only $1.50 a pound! In winter, when strawberry prices rise, we simply buy mandarin oranges instead.
It’s just a matter of being flexible and taking advantages of opportunities when they arise.
Arbitrage Opportunism
There’s also arbitrage opportunities that exist for the sharp-eyed and dedicated deal hunters. Arbitrage is simply buying at one price in one market, and then selling it at a higher price in another market.
Frequently you see people taking advantage of extremely good deals (or discount coupons) at local retailers. They buy as many as they possibly can, and then resell these goods on ebay or craigslist for a higher price.
I see this behavior most often with consumer electronics, popular toys, and video games. The HotelsandMoney blog provides a perfect example of arbitrage opportunism, showing how to buy and resell Legos online.
While I’ve never done this myself, I do know a fair number of people that have tried it. As a side-hustle, arbitrage opportunities can be a good way to make a little extra money. But be warned: it takes a lot of effort, and the profits are quite moderate in most cases.
Travel Opportunism
Traveling also provides great discounts for the opportunistic. Travel prices are always fluctuating, and occasionally fantastic deals will appear out of the ether.
While these might be a challenge to take advantage of while working, once you reach Financial Independence it’s much easier to capture those discount travel opportunities.
For one, you don’t need to ask the boss for permission to take a vacation! If there’s a great deal on tickets to Hawaii next weekend, you simply buy those discounted tickets and go on a cheap Hawaiian vacation.
The great part about opportunistic travel is there’s always a location that’s being discounted or has a seasonal price discount to take advantage of.
Traveling with a family of 4 means I’m always looking for discounts and deals to reduce costs for family vacations. I usually setup price alerts on Kayak.com for locations that interest me. When the good deals happen, we try to take advantage of them!
This year we’re even trying a little travel hacking for our family trip to Japan.
‘Free Stuff’ Opportunism
Long time readers of this blog know — I absolutely love free stuff, and free stuff is all about being opportunistic. For example, last month I swapped out our dining room chandelier for a “new” model. That new chandelier was given to me completely free.
I think it’s important to also mention I wasn’t actively looking for a new chandelier. But, when the opportunity arose, I took advantage of the ‘free’ opportunity to improve a small part of my life. Win!
This has happened to me countless times over the years — most of our furniture was free, our TV was free, our bed was free, many of the tools in the garage were free, and countless children’s toys were all free. Literally thousands of dollars worth of stuff (if sold at retail prices) was just given to me for free.
One man’s trash is truly another man’s treasure. So much of this so-called “trash” is actually really good stuff, but you have to be willing to put in a little work to make it happen.
I’m constantly amazed by the things people will give away or dispose of. Most “freebies” simply need a little cleaning or a little fixing to be perfectly serviceable household items.
It’s been a gigantic financial boon for my family simply because we’re willing to take advantage those ‘free’ opportunities when they arise.
Are You Opportunistic?
Even if you’re not a super-investor like Warren Buffett, being opportunistic can definitely have a big impact on your finances.
Flexibility is key, as well as constantly keeping an open eye for opportunities. You won’t find great opportunities if you don’t look around — I’m always scanning my local grocery store ads, free groups, and even Slickdeals forums for good opportunities.
I listed a few of my favorite areas to be opportunistic in this post, but there are tons of places to be opportunistic in life. Maybe you take advantage of great opportunities at work, or maybe you’re good at ‘networking’ to get doors unlocked…. however you do it, I want to know how YOU are opportunistic.
Tell me about your opportunistic wins (or failures) in the comments. I’d also like to know how you found those opportunities. Finding opportinites is often half the battle.
I’m almost positive there will be great ideas we can all learn from.
[Image Credit: Flickr1]
Mr. Tako,
I think “opportunistic” is a great way to describe many financially astute and frugal people! Your travel section made me think of a good resource I’ve just subscribed to– Scott’s Cheap Flights. Free, and he sends an email with many different low cost flight opportunities.
“Opportunistic” usually seems to have a bad connotation to it. If someone is described as opportunistic, people tend to think they are devious and just want to take advantage of a situation or a person to advance their own agenda.
I think Warren Buffet and your examples tell a different story about opportunism. This past weekend I got a lot of free clothes for Baby FAF. I actively sought out for them and picked them up when other people offered the clothes. It was a frugal win for me!
My wife and I love international travel and try to be very opportunistic with it. Last year my wife had work functions which took her to Hong Kong and Tokyo at separate times of the year. While I am not a fan of flying with 2 minions under 5, it was worth it to beg, swap, and cajole the time off so the whole family could tag along with her.
It was fun and great cultural exposure for the whole crew. We had other low key vacation plans for the year, but I would have regretted letting that experience get away from us!
Free stuff is all around us. I was surprised by how much there was. All I had to do was open myself up to it (e.g. Join my local Buy Nothing group).
The other thing I like to take advantage of are the seasons. As with food, there is much to be said for tailoring activities to the seasons.
Mrs. BITA recently posted…Am I Really Retiring Early?
I think I’m a little *too* opportunistic. I particularly love finding free stuff, but Mr. Picky Pincher draws the line at my penchant for dumpster diving. It’s so important to look for opportunity every second of the day–you never know what you’ll find!
Is it actually possible to be too opportunistic? I wouldn’t think so!
I am obsessed with checking out hard rubbish. Thankfully I ride a bike everywhere so when I see things like a rabbit hutch that I REALLY want but have zero need for, I can’t get it onto my bike, so it doesn’t come home :p
LadyFIRE recently posted…3 ways to shorten your mortgage right now
With free stuff, just be sure you can use it and it’s one in-one-out kind of situation. Otherwise you end up cluttering up your life, renting a storage space or living in a larger home than you need. When our children were small we were happy to receive furniture from relatives; we didn’t want to invest in something that might end up with felt marks and major scratches. These days I don’t really want to add to what we own. I gave up garage sales years ago because they were too many tempting deals, exceedingly cheap good stuff, but things I had no use for. I suppose I could have organized myself to sell it but that would mean giving up what I value most nowadays — my time.
Yes, I agree — don’t get free stuff you won’t use.
I figured out how many pounds of berries I go through in a year and made a point of going out on a Saturday and picking that many then freezing them. Same for u-pick strawberries, blueberries, raspberries, blackberries, and cranberries. (Though cranberries are only on sale at Thanksgiving time.) Blueberries are probably the best deal b/c they are easily prepared and more robust than raspberries. (Strawberries must be hulled before freezing.) Also note the store price may be less than the u-pick price at the peak of season. When berry season comes around we inventory the freezer and adjust the purchase quantity by whether we ran out or retained a surplus.
Around here, u-pick places are more expensive than buying it in the store. Which is sad because it wasn’t that way in the past.
Other than giving the kids an experience, it’s really not worth it.
Agreed. One must keep your eye out to compare prices. In either event buy a year’s worth to freeze at the peak of the season. We keep a chest freezer for this.
Since you’re going to Japan – try http://www.tokyocheapo.com
Yep, I’m familiar with that one. We probably won’t be in Tokyo for very long though.
A few years back, right after we bought our first house, my wife’s grand mother passed away. My wife was the only one willing to take her grand mothers furniture (her siblings declined). Our house is still largely outfitted with these items. The ironic thing is some of it would now be considered an antiques dealers dream.
Full Time Finance recently posted…Financial Life Curve
Oh man, that looks like an awesome TV. We live in a high rise so there are always some kind of stuff set aside next to the trash bin. Paintings, fixtures, fitness ball, etc… I haven’t picked up a nice TV yet, though…
Travel is good if you don’t have kids. I love to travel in the Fall. Everything is cheaper and it is less crowded. Summer is nice here so I’d rather stay in town. It’s starting to get harder now that our kid is in school. They don’t like absents.
“We try not to be fussy eaters, and simply take advantage of great deals when they happen.”
You are speaking my language! Before we started travelling (and eating out pretty often), I used to never bring a shopping list to the grocery store. I’d just see what’s on sale and make up recipes from those ingredients. Easy peasy.
Being opportunistic is awesome! I don’t get why the word has such negative connotations (I guess people assume being opportunistic means take advantage of others, but really you’re just optimizing and taking advantage of opportunities).
I’m with you FireCracker… I never thought of being opportunistic as a negative thing!
He (or she) who makes the most efficient use of resources available to them, “wins”.
Very cool post Mr Tako. I like the concept of food opportunism. I guess I never thought of taking what the food market gives you and centering your meal plan around that. My wife and I are working at becoming better cooks, but still have a long way to go. Figuring out what to cook with limited, discounted resources would be a challenge, but nothing that is insurmountable. I know this thought process must save a ton on fruits and veggies. If you buy those at full price…watch out. There is always a deal on something if you are willing to try something new.
You mentioned it in the article and this requires patience. If you are willing to wait, there will be deals. Know your prices and play the waiting game. Your patience has definitely paid off!
Bert
I am learning a marketable skill for free because I’m living in a city with a lot of people who want me to have this skill. Most folks did not notice the opportunity, but I did. In the end, I’ll spend roughly $500 becoming highly skilled in this area. I’ll make that amount in 5 hours once I am able to bill for it.