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Level Two - Save Consumables (Editor's note: "Level Two: Invest in Production " is the ninth and concluding chapter of a book by Mr. Pugsley entitled "The Alpha Strategy", written twenty-eight years ago. Links to the previous chapters can be found at the end of this chapter-JSB)
Each individual's choices will be different. Your tastes and values are unique, and your consumption of goods reflects this. To take maximum advantage of this strategy, you must survey the products you regularly consume, and select from them those items that can be purchased in advance and stored. If it were possible to create a perfect savings account, it would consist of a lifetime supply of every item you'll ever use - food, shelter, clothes, transportation, recreation, medical care - everything. With such a stockpile, you would have reached financial independence and eliminated forever the risks of external economic forces such as inflation or recession. The nature of goods makes such a savings account impossible to attain, but you should try to acquire one that is as close to perfection as possible. Let us review once more those characteristics that we want. Shelf Life The item should have a long shelf life. Hard goods such as tools, pots and pans, auto parts, etc., are best because their quality and usefulness does not deteriorate with time. Soft goods such as underwear, sheets, and towels may suffer some small deterioration over long periods, but probably not enough to make a measurable difference to the user. Most foods suffer significant change in taste, consistency, and nutritive value over time, but a few do not. For example, sugar, if properly stored, will last indefinitely with no discernible change, as will raw grains such as wheat and rice. Canned goods, on the other hand, have relatively short shelf lives, and their quality declines continuously over time. If a storage plan is meant to help a family survive a famine, stale food is acceptable. If the plan is meant to preserve wealth, then it is not. The Alpha Strategy is an idea for increasing your standard of living. it is a failure if it causes your standard of living to decline, which is what happens if you are sentenced to consuming goods that have deteriorated in quality. Accurately determining the shelf life of many products is difficult. In our society, most manufacturers assume that their products will move through the marketing pipeline quickly and will be consumed almost immediately. Consequently, they have little need to determine maximum shelf lives with any accuracy, except in cases where deterioration is so rapid that the products might be affected before they can reach the consumer. Before you buy a ten- or twenty-year supply of some item, you want to be certain that it will last that long, and sometimes appearance are deceptive. Take paper towels as an example. On would assume that they would last for decades if properly stored. In practice, manufacturers often add resins to increase the wet-strength of the paper, and these resins undergo chemical changes over time, causing the paper to gradually harden. Therefore, treated paper towels may become brittle after five years or so. On the other hand, some items that might appear to have a short shelf life can be stored indefinitely. I have a gallon bottle of white glue that is over 20 years old. I have used it from time to time on woodworking projects, and find its quality has not changed at all in two decades. In the discussion of consumer products that follows, you will find brief comments on the estimated shelf lives of many items. These estimates were obtained from conversations with the manufacturers, and should be used only as general guidelines in your planning. In many cases, even manufacturers are limited to educated guesses, since specific hard data on shelf life has not been compiled. If you plan to purchase a large quantity of any item for which the storage life is a significant factor in determining the amount you put away, be certain to check with the specific manufacturer to verify any figures found here. Because of manufacturing processes, similar items from different manufacturers may have significantly different shelf lives. When buying any item with a limited shelf life, remember that it may have been sitting in the manufacturer's wholesaler's, or retailer's warehouse for months before you purchase it. Either check the dating code on the carton, or if there is none, and you are suspicious that the merchandise may be old, take down the lot number, and check with the manufacturer to find out when that lot was produced. Functional Obsolescence The item must not become functionally obsolete. Advancing technology brings improvements in design and lowers the manufacturing cost of many items, and the Alpha Strategist should avoid stockpiling those in which this change is likely to be dramatic. To have the optimum standard of living, you'll want to be in a position to take advantage of technological improvements. Certainly, you would avoid stockpiling things from high-technology fields such as electronics. Cameras, kitchen appliances, and other electro-mechanical devices are also subject to abrupt design improvements. Since it is not always possible to anticipate technological improvements, occasionally you'll make a mistake; however, just because you buy something today and later are offered a better model at a lower cost, your investment is not lost. The original item will still give you the same rewards and utility that is offered when you made the purchase. What you have lost is the improved features that you could have enjoyed had you waited. If you paid $300 for a twelve-inch black and white television, and they subsequently fell in price while rising in quality, you didn't lose your investment. You still received exactly what you paid for - a twelve-inch, black and white picture. Design Obsolescence The item should be fashion-proof. Social pressure inclines most of us to keep up with the latest styles, and if this is true in your case, it disqualifies a great number of items for your stockpile. Many clothes, except for work clothes, underwear, and a few staples such as men's dress shirts, quickly go out of style and would be poor long-term investments for the fashion-conscious Alpha Strategist. This is also true of such things as handbags, jewelry, wallpaper, and even automobiles. You should think about the degree to which your own habits and tastes change, as well. It won't do to buy 500 golf balls and later get bored with golf, or to put away a lifetime supply of gardening equipment and later move into an apartment. If you do make a mistake, however, and select an item that you later find you can't use, you may not have lost your investment. You would normally be able to resell most of the goods you've stored, and if you purchased them at a discount, and have stored them carefully, your loss from the error should be minimal. Size The item should present no serious transportation or storage problems. Estimate the costs of storing, as well as the problems of handling and moving each asset. Crystal is going up in price, but it is fragile and therefore more costly to move and store. Paper towels may be safe from damage by rough handling, but take up so much room that storage costs eat into profits. On the other hand, a person who doesn't plan to move and who has ample storage space can consider stockpiling these things without regard to the costs of storage and moving. To the stable family with plenty of storage room, even such bulky items as firewood, bricks, and lumber can be considered. Reviewing Your Needs Your savings account will be a function of your family size, your tastes, and your investment capital. If you don't have enough capital to buy all the things you could store, then you'll review your list and purchase those things that you use most often, that are safest from functional or design obsolescence, that take the smallest amount of storage space, and that offer the greatest profits in terms of quantity price breaks and potential price increases. If two items are roughly equal in the above respects, then you can choose the one that is most susceptible to becoming scarce due to government interference in the market. Assuming your capital is limited and you cannot afford to buy the maximum supply of every item, try to buy a short-term supply of a broad cross-section of items, rather than a long-term supply of a few. Considering the risks of recession, shortages, and so on, you would be far better off having a three-month supply of every storable item that you consume than you would to having a twenty-year supply of some items and one of others. The wider the variety of items you have in storage, the more your savings protects you against the risks of economic change. The Appendix lists several hundred common items that are logical candidates for an Alpha Strategy savings account. Examine each item on the list and make a rough estimate of the total quantity that you and the other members of your family consume in a year. Multiply your estimated annual consumption by the shelf life of the item. This will tell you the total quantity you could reasonably stockpile. Multiply the quantity by the price, and you'll have the maximum amount of capital that you could invest in that asset. By adding up the potential costs of all the items you could store, you'll have a rough idea of the total amount of paper money that you could invest in personal consumption items. If you have sufficient paper savings to buy it all, do so. If not, select a cross-section of the most practical goods to store, and buy those. You can then add to your stockpile each month from your surplus earnings. Your Home The most sensible purchase of all is the home. It represents the largest investment you can make in consumption goods, and the most logical. Inflation will continue, and rents will be forced higher and higher. Furthermore, even if rent controls are instituted, the renter's situation will only become worse, as shortages will make rentals difficult if not impossible to find. Unless there is a doubt as to how long you intend to live in an area, buy your home, do not rent. Although many homeowners have enjoyed immense increases in the prices of their homes in the past few years, this is not the purpose of buying under the Alpha Strategy. Your purpose is to protect the purchasing power of your paper savings by converting them into real wealth. If you own your own home, you have a wide range of opportunities for storing wealth in maintenance and repair goods. If you've been a regular customer of your local hardware store, you're aware of the rapid price increases on these items. Most paints and paint thinners have long shelf lives, and could be purchased in advance and stored. The next time you decide to paint your house, consider buying enough paint and equipment to do the job two or three times. If you're not certain of the color you'll choose the next time around, buy neutral paint, and mix in the colors when the time comes. Tools, bits, and blades are perfect items. Make an estimate of the number of hammers, saws, screwdrivers, circular saw blades, drill bits, etc., that you'll be likely to need over the next twenty or thirty years, and buy them. Garden tools, hoses, work gloves, lawnmowers, lawnmower parts, leaf and trash bags, insecticides, plant food, fertilizers, and seeds are a few of the things used in the yard and garden that should be considered. Even wheelbarrows and plastic or metal trash barrels could be bought and stored, provided you have room. (Trash barrels can make excellent storage containers for other items. All the minor hardware that is used in home maintenance should be stockpiled, as well. Screws, nails, wall anchors, screening, sandpaper, masking tape, sprinkler heads, pipe, glue, plastic sheeting, and hinges are just a few of the multitude of things that the average homeowner is constantly running to the hardware store to buy. Bought in advance, they preserve the purchasing power of your money, and simultaneously save you time and energy, since you have them on hand when you need them. One item that everyone uses is the common light bulb. The annual consumption rate per household is twenty-four bulbs, which means that over twenty years the average home will use 480. Since bulbs come forty-eight to the case, a family could buy ten cases and not have to buy another bulb for twenty years. In early 1980, bulbs were selling for between 50 cents and 70 cents apiece; thus, in addition to the discount you could get for buying in quantity, a stockpile of bulbs could preserve between $250 and $350 of your purchasing power. In reviewing maintenance items, don't forget spare parts and filters for furnaces, heaters, air conditioners, water softeners, and water heaters. Homes with hot tubs or swimming pools can stockpile chemicals, filter materials, and pool cleaning equipment, as well. Foods Foods are the number one consumption item for most of us, but because of their perishable nature they must be carefully selected. To begin with, you can eliminate all your fresh meats, fruits, and vegetables, as they will not keep long enough to be used as a long-term inflation hedge. There has been a growing demand for freeze-dried foods during the past few years, most of it coming from those who feel that there will be a breakdown in the chain of supply. While you may choose to put away freeze-dried foods, remember that they do not fall within the definition of good savings assets. As was mentioned earlier, the Alpha Strategy is a means to protect purchasing power, and is not intended to be a means to defend against social collapse. Canned foods. Certain canned goods may keep for several years, but over time usually suffer some deterioration of taste and nutritive value. Acidic canned foods have the shortest shelf lives, and manufacturers recommend that they be used within one year. These would include canned fruits such as pineapple and grapefruit, and canned spinach. Most canned vegetables such as potatoes, yams, corn, carrots, and beans will lose very little in food value or flavor over the first year, and if stored in a cool, dry place may last for two or three years without substantial deterioration. As a basic rule of thumb, however, try to use all canned foods within eighteen months. The most sensible strategy for canned goods is to always buy a one-year supply of each item. Since prices are rising monthly, even this limited supply offers significant inflation protection, and the convenience of bulk buying will add to your profits. Sugars Sugar makes a good preservative, so any canned foods rich in sugar are likely to have long shelf lives. Jams, jellies, and other preserves will last indefinitely, as will most fruits that are packed in sugar syrups. Sugar itself is an excellent storage item. Historically, it has been most susceptible to price controls; consequently, it has been subject to periodic shortages. The indefinite storage life of sugar makes the stockpiling of a ten- or twenty-year supply a most prudent idea. Honey, syrup, and molasses are nearly pure sugar, and can be kept for years with no discernible change in taste. At most, they may crystallize, but this does not represent a change in chemical composition, merely a bonding of the individual sugar molecules to one another. The crystals can be easily broken up by heating and stirring. Some nutritionists suggest that honey has certain beneficial enzymes that can be destroyed by heat, so if you're concerned about this, keep the temperature of the honey below 150 degrees when dissolving the crystals. The taste of the honey or syrup should not be affected by higher temperatures. While on the subject of honey and syrup, most producers pack it in store-size containers of eight, twelve, sixteen and thirty-two ounces, as will as in gallon and five-gallon sizes. A five-gallon tin of honey weighs about sixty pounds, and is usually about half the price of the honey packed in the smaller sizes. Frozen Foods. When I mention the Alpha Strategy, many people immediately tell me of the money they have saved by buying frozen sides of beef. With beef prices skyrocketing, they not only gained the advantage of bulk buying but bypassed the price hikes as well. Lest the strategy get named "The Frozen Beef Strategy," let me warn you that frozen foods may be one of the poorer ways to preserve the purchasing power of your savings. To begin with, frozen foods deteriorate with time. At the temperature of the average freezer (about zero degrees Fahrenheit), there is still a very slow biochemical process occurring which can change food's texture and taste. Moreover, unless frozen foods are absolutely vacuum-sealed, moisture loss gradually dries them out. The stories about mammoths still being edible after being frozen in Siberian ice for thousands of years may be slightly exaggerated, and besides, that Siberian ice is far colder than the average freezer. The storage life of different meats and vegetables varies, but a general rule of thumb is that each ten-degree rise in temperature cuts the storage life in half. If you could maintain the temperature of your freezer at fifty degrees below zero, you could significantly extend the storage life of the foods. The only way you might get permanent storage without deterioration would be to get the temperature down to the point where oxygen liquefies (around 300 degrees below zero). By the time you managed that, your savings from storing the food would have long since evaporated. This brings us to the major drawback to frozen foods - the storage cost is high relative to other goods. You can pack about 28 pounds of frozen meat in one cubic foot of freezer space. Assuming an average cost of $2.50 per pound for beef, the cost of a cubic foot (about 28 pounds) would be $70, and, at 5 cents per kilowatt-hour, the cost per year for the electricity to store it would be $2.50, or 3.5 percent of the value, not including the freezer and the cost of the floor space. Even if you have plenty of space and already have a freezer, the costs are still higher than the storage costs for the majority of other items. Finally, keeping your wealth in frozen food adds one additional risk. If you lose your electric power for any substantial length of time, all the food could thaw. If you happen to be gone on vacation when this occurs, you could lose your entire investment. In spite of the drawbacks and costs, you may still decide to place part of your assets on ice. Freezers have been around for years and many people are already following the Alpha Strategy on a small scale. The inflation protection may not be as great as with other goods, but there is still the convenience of having food handy, and the initial savings to be enjoyed by taking advantage of seasonal low prices and periodic supermarket specials. Grains, legumes, and other seeds. Nature designed seeds to pass many seasons without significant change, and seeds form a major part of the human diet. All grains - wheat, rice, oats, rye, barley, millet, etc.--are seeds. So are corn, peas, all kinds of beans, coffee, and nuts. When dried, all but a few of these can be stored for years without danger of deterioration, provided certain simple storage rules are followed. First, let's cover those seeds that don't keep well. You can eliminate nuts, as they have relatively short shelf life. Oilier nuts, such as peanuts, lose palatability after a few weeks, although if refrigerated they might be good for up to six months. Even the drier nuts will retain their flavor for only a few months at room temperature. Coffee is a high-cost item that is a staple in most people's homes, but according to coffee manufacturers, it has a short shelf life even when vacuum packed (about ten to twelve months). the raw, dried coffee beans begin to lose their flavor in about six months. Although coffee producers claim a short shelf life, some individuals report opening cans of coffee that were ten or fifteen years old, but which were still fully flavorful. If you drink a lot of coffee, you might consider putting away a pound or two for a couple of years. If you open it and find that it is still acceptable, then you can go ahead and stockpile from that point forward. If it is stale, then you can assume the manufacturers are right. The best seeds for storage are grains such as wheat and rice, and dried legumes, such as peas and beans. All of these will keep ten years or more if properly stored, and will suffer no significant loss of taste or nutritive values. Most seeds contain oil, and for this reason it is best to store the grains whole, without crushing. Once milled, grains are not only more susceptible to insects, they can also turn rancid as the oil is exposed to air when the seed is crushed. Wheat, for example, will keep for decades if properly stored, while flour will normally last only a few months. If you use a lot of flour or cornmeal, as most of us do, store the grains whole and buy yourself a small electric mill for grinding them into meal and flour. Care should be taken in storage of all of these seeds, as they are subject to mold, insects, and rodents. They should be kept dry and as cool as possible, preferably in airtight containers. Verify that the moisture content of the grain is less than 10% when putting it into the airtight container, then even if insects do get inside, they won't survive. The same five-gallon tins that honey comes in are perfect for the grains, as they are easy to handle, and are square, so they stack and pack well, and are inexpensive. A good source for bulk purchases of all the grains are the health food stores. You might also contact the local Mormon church, as they often have co-op buying arrangements. Tea Tea is another near-perfect savings asset. In the small quantities in which we normally purchase it, tea is very expensive, and so bulk buying saves significant money. Tea takes little storage room, and suffers no significant loss of quality over time. My Chinese friends have informed me that the highest quality teas, some costing more per ounce than gold itself, grow even more valuable with age. The longevity of tea is attested to by the fact that in times past it has been used as money in various sections of the Orient. If you enjoy black tea, consider buying tea "bricks," highly compressed blocks of tea, usually about eight inches square and an inch thick. They take little room to store, will last indefinitely, and can be broken apart and used as required. One of the great advantages of the Alpha Strategy is that large purchases give us an incentive to spend the time necessary to become knowledgeable about many of the common products that otherwise pass through our lives unnoticed. Tea is a good example. In the Orient, where it has been the primary beverage for hundreds of years, it is understood and appreciated much like fine wines are savored in the West. There are numerous varieties of tea grown throughout the region that stretches from Java to Japan, and from India to Sumatra. The connoisseur will know the differences between the black teas of China and those of Ceylon, or the green teas of India and those of Japan. As tea "tyros," Americans tend to buy it occasionally, a small box at a time, and usually will not spend the time to sample different types or to study the history and nuances of the beverage. If you save tea, you will be faced with buying a supply sufficient to last many years. What a magnificent incentive to spend a day in the library researching the fine points of tea, or to take a trip to your local Oriental neighborhood where you might find a knowledgeable old tea merchant who would be willing to share his wisdom and let you sample the wide range of varieties. Being faced with selecting items for our stockpile is perfect justification for investing time in learning more about the products we consume, and this in turn should significantly increase the pleasure we get from consuming them. Other dry foods. Another dry food that most of us consume is pasta, including noodles, spaghetti, macaroni, and lasagna. Pastas have a long shelf life (five years or more), and can be purchased in economical bulk containers from Italian markets, or grocers who cater to restaurants. Storage requirements are simple, and similar to the requirements for grains. Just keep them dry, cool, and protect them from bugs and mice. Miscellaneous foods There are a variety of other minor food items that can be part of your savings plan. Cornstarch, gelatin, baking soda, pepper, and salt are a few of the lesser items that can be stored for several years without deterioration. Cooking oil has a shelf life of approximately three years if it is unopened. Oil deteriorates when exposed to air, so as long as it remains sealed, it stays fresh. Shortening or lard, which is animal fat, will keep for five years or more, but again, deterioration begins once oxygen gets to it. When stocking up on oil and shortening, stockpile it in sizes of containers you can conveniently use up in about six months. Vinegar is a preservative agent in itself, and therefore a perfect item. The average family does not consume much, but it makes sense to put away at least a five-year supply. There are no special storage requirements. Herbs and spices can also be saved, but because of the small quantities of these items consumed by the average family, you probably will find that the convenience of having them on hand will become more important than the inflation protection. If properly stored (that is, under dry, dark, cool conditions), whole spices such as whole nutmeg, cloves, allspice, and stick cinnamon will keep for a minimum of five years. Ground spices and the leafy herbs will keep a minimum of two years, while members of the red pepper family such as cayenne, chili powder and paprika will stay fresh for about a year (two years if refrigerated). Vitamins. Vitamins are one of the food items for which accurate shelf life information is hard to obtain. It seems that the manufacturers have no compelling need to determine just how long vitamins might last on the shelf, beyond making certain that they have minimum potency loss over the year or two that they might be in the distribution chain. Occasionally a retailer will come across a case that has been in his warehouse for four or five years, and will send a sample to the manufacturer to test potency, in which case some knowledge is gained. Since the samples are random, and the storage conditions uncontrolled, the conclusions that can be drawn from these tests are tentative at best. In considering what brand and type of vitamins to stockpile, the Alpha Strategist should keep just a couple of basics in mind. Tablet, capsule, and powdered vitamins will have a significantly longer shelf life than liquid preparations. The enemies of potency are high humidity and high temperatures, so the vitamins should be kept in moisture-proof containers in cool, dark conditions. If it is possible to refrigerate them, that will greatly extend their life. Vitamin A should have a shelf life of at least two years, if kept sealed at room temperature, and that could be extended to at least five years, if refrigerated. The B vitamins are relatively stable in their dry form, and should be good for three to five years at room temperature. The B vitamins may develop a strong vitamin odor over time, but this in no way indicates that the potency has dropped or the vitamin has gone bad. Vitamin E is similar to vitamin A, that is, a minimum of two years on the shelf, and five years under refrigeration. Vitamin C in powdered form should last a minimum of five years at room temperature, provided it is not opened. The powder may turn slightly yellow with age, but this does not affect the potency. Multiple vitamins should last at least three years if kept sealed and reasonably cool; however, it would be wise to verify the shelf life with the specific manufacturer, since the particular combination of ingredients and the type of manufacturing process affects the shelf life. Wines There is no investment quite so appealing as that which yields a dividend of personal pleasure to the investor. For those who enjoy the taste and ritual of wine, the investment in a substantial personal wine cellar offers the best of everything: low risk, protection against inflation, no taxes on the gain, and an interesting and pleasurable avocation - in other words, it is the perfect asset for saving. It is not necessary to have an educated palate, or even an understanding of the difference between a Bordeaux and a Burgundy to profit from an investment in a substantial wine cellar. Connoisseur or not, the dollars saved from advance purchases of wine are a benefit to even the lightest drinker. Wine has all the benefits of the best savings asset, and a few more. Most of the wines you will consider storing will improve with age; today's $5 Cabernet Sauvignon may become a $50 wine after five more years in the bottle, even without inflation to hurry it along. This benefit is not necessarily one that you can cash in on in dollars and cents, but it is a dividend you will collect in pleasure. In this same category falls the benefit of owning and enjoying a wine cellar. Before buying wine for storage, it's necessary to know which wines store well and which store poorly. This means knowing a little about the basic cultivation and chemistry of wine. There are five major factors that enter into the quality of a wine before it reaches the bottle: the basic type of grape, the soil in which the grapes were grown, the climate during their growth, the time at which they are picked, and the skill of the vintner in processing the grapes from field to bottle. Once these factors are set and the wine is in the bottle, the future changes in the quality of most wines can be roughly predicted. Some will immediately begin to deteriorate, and some will get better year after year, sometimes taking decades to reach their fullest potential. Wine changes in the bottle are due to a continuing chemical reaction. The relative abundance or scarcity of certain elements determines the point in time at which the wine will reach its peak of quality. In a young wine, acids, sugars, minerals, pigments, esters, aldehydes, and tannin are all present. These elements are the basic preservatives and their interaction produces the flavor, bouquet, and body of the wine. The more of these elements that are present, the longer it will take the wine to mature, the longer the wine will keep, and the more likely it is that it will be a good or great wine. Tannin, or tannic acid, is one of the most important preserving and flavoring agents. A young wine high in tannin will mature slowly and enjoy a long life. The red wines of Bordeaux are high in tannin, and thus are generally longer lived than the reds of say, Burgundy, where the reds are higher in glycerin. Sugars, other acids, and alcohol also act as preservatives. The sweet white Sauternes, with their high sugar content, will keep well, as will those with a high alcohol content such as Port and sweet Sherry. Lighter wines, such as the lighter red Beaujolais and the white Rieslings, are generally lower in some of these critical preserving chemicals, and thus reach maturity rapidly and should be drunk within the first few years after bottling. In most cases, wine doesn't go bad (in the way that milk goes sour) unless it's exposed to oxygen. When exposed to oxygen, either because of a faulty cork or when opened, the acids turn the wine to vinegar - then the wine is truly spoiled. More often, the wine very gradually loses its body and flavor, and is simply said to be over the hill - not spoiled, but no longer really prime. In general, the better the quality of wine, the later it will mature and the longer it will keep. Bad wines show up early and die young. Of the European wines, Reheingau, Red Bordeaux, White Burgundy, Chablis, the bigger red Burgundies of the Cote de Nuits, sweet white Sauternes and Chenins of Anjou, red Rhones, and the better Champagnes are good for cellaring. The dry white wines like white Graves, Sauvignon wines of the upper Loire, and Muscadet are not good wines for keeping. The five most likely candidates for cellaring among the California wines are Cabernet Sauvignon, Zinfandel, Petit Sirah, Sauvignon Blanc, and Pinot Blanc. Chardonnay, California Pinot Noir, and most of the Rieslings are not good keepers. Wine is a delicate liquid that is constantly undergoing a chemical change. This chemical reaction initially serves to improve the wine, to bring it to maturity, as the tannin in the wine is gradually converted to perfume-like esters. At a certain point, however, the peak of quality is reached, and after that the wine begins to become less pleasurable. Since the speed of a chemical process, slowing down both the maturation and extending the ultimate life of the wine. However, it seems to be the consensus that the actual temperature at which wine is stored is not so critical as keeping the temperature constant. Since underground cellars tend to remain at a more constant temperature, they have been the customary location of the wine. In today's houses, however, real cellars are more and more a thing of the past, so most of us must make other provisions. Expensive wine racks are not necessary. You can build normal wood shelving into a closet or pantry, and simply store the case of bottles on the shelves. Wine bottles are packed neck-down in their cardboard cartons in order to keep the corks wet. When storing you would be wise to turn the cartons on their sides, thus taking some of the pressure off the corks while still leaving them covered. Don't be paranoid about the storage of your wine. Keep it at a fairly stable temperature and out of direct sunlight, and it will probably keep a reasonable length of time. How much wealth can you protect? If your family enjoys an average of two bottles of wine per week, you will consume about a thousand bottles in a decade. Stocking 1,000 bottles at an average of $5.00 per bottle would mean a conversion of $5,000 from paper claims into real wealth. If you are a wine lover, this would certainly be one of the very safest and best investments available. You would completely protect the purchasing power of your money, and, assuming you replenish that stock as it's consumed, you would always be drinking wines at prices in effect ten years back, as well as enjoying far better wines than you could hope to buy with the same number of inflated dollars. Spirits Wine is not the only alcoholic beverage that can be profitably stockpiled. If you drink scotch, bourbon, vodka, gin, or any other hard liquors, you'll find them to be good Alpha items. All should store well for ten years or more, provided you store them properly. First, the bottles must be tightly capped, and it is best not to rely on the bottler to have seen to this. Open the cases and make certain all the bottles are tightly sealed. If they have screw-type caps, tighten them. If you're in doubt about the seal, melt some paraffin in a pan, and dip the tops of the bottles in it. If the bottles aren't completely sealed the alcohol will gradually evaporate, and you'll wind up with lots of solids, and little punch. Second, store them in a dark, cool storage area. Light will cause chemical reactions over long periods that will change the liquor's flavor. Heat, again, will shorten storage life, so keep your cache in a cool environment, preferably below 70 degrees Fahrenheit (the cooler, the better). Finally, do not store your alcoholic beverages around any strong odors. Mothballs, aromatic cedar, gasoline, oil, and all other strong-smelling substances will contaminate them, as the liquor, even though stored in tightly sealed bottles, will absorb these odors. The flavored liqueurs are not good Alpha items, as their shelf-life is too short. While it varies depending on the type of liqueur, generally a year or two is all that can be counted on before flavors change or are lost. Beer is definitely out as a way to store your wealth. Its shelf life is estimated at about sixty days. Buy it fresh. Health & Beauty Aids Many of the non-drug health and beauty items you commonly buy will keep indefinitely, and most over-the-counter and prescription drugs also have extremely long shelf lives. Even those prescriptions that carry an expiration date will usually retain their potency much longer than is indicated on the package. If you regularly use some medication for a chronic condition, discuss the item with your druggist, and stockpile as much of it as you'll need for the shelf life of the product. Items such as deodorant, shampoo and toothpaste will keep indefinitely when stored in a cool, dry place, and mouthwash will keep up to three years under these same conditions. Hand creams and face creams will also keep at least two years under cool, dry conditions, and may indeed last longer. While the consumption rates of these items vary substantially from person to person, you can calculate your average annual usage by simply keeping track of how much you use during a month. In the case of toothpaste, the average American brushes away thirty ounces (about three nine-ounce tubes) each year, or about thirty tubes per decade. This means that a family of four can buy ten cases (twelve tubes per case), and thus get inflation protection on another $200 or so of savings. Although a woman may frequently change her shade or brand of lipstick and nail polish, there are many cosmetic items that remain standard most of her life. Nail polish remover would be an example, as would such things as cold cream and powder. Any of these items would be good Alpha items. Cosmetics frequently come in small sizes carrying high retail markups, so search for institutional or professional sizes. A beauty supply store will provide some outstanding bargains for the Alpha Strategist. While reviewing other health and beauty products for stockpiling, don't forget razor blades, toothbrushes, sanitary napkins, combs, brushes, and first-aid supplies. The Appendix lists over fifty common items in this category, but a survey of your bathroom should uncover even more. Cleaning Supplies Every family consumes a steady flow of cleaning products, and although most of these things have shelf lives measured in decades, caution is advised, as some things do not. Certain dishwasher detergents, for example, have chemicals added to them that deteriorate rapidly. You may find these detergents on sale and assume that it is a good opportunity to stock up, while in fact the merchant knows that his stock is becoming outdated and he is trying to unload it before it goes bad. Assume that dishwasher detergents have a shelf life of one year, and when buying a year's supply, check the dating code on the box to make certain you are buying fresh merchandise. The same problem exists in other detergents. Laundry detergent has a problem similar to that of dishwasher detergent. It normally has a shelf life of two years, and after that time it becomes less soluble. The same thing happens with bubble bath. Dishwashing liquid may begin to lose its perfume after two years; however, its cleaning power should not be affected. Fabric softeners, either in sheets or in bottles, will last indefinitely. Again, the perfume will fade after six months or one year, but overall performance will not suffer. Hand soap will keep indefinitely. It may yellow somewhat over the years and you may notice it doesn't lather quite as well, but its cleaning performance will not change. The best Alpha items in the cleaning equipment category are brushes, brooms, mops, vacuum bags, pot scrubbers, trash bags, compactor bags, sponges, and scouring pads. With few exceptions, cleaners and cleaning aids offer the Alpha Strategist wide opportunities to protect capital. Again, this is an area where huge initial savings can be made by purchasing the largest institutional sizes. A survey of your kitchen and laundry room will remind you of the items you use most, and for additional suggestions, refer to the list of cleaning items in the Appendix. Paper Products Since the use of paper in our lives has been growing rapidly over the past few decades, paper products offer a large area of potential investment. For the most part, paper goods have indefinite shelf lives, providing the paper is not exposed to light or to destruction by insects or mice. The biggest drawback to some of these goods is their low cost per cubic foot, as this makes them costly to store. Be careful in choosing which paper products to stockpile. "Distributor grades" or "economy grades" contain ground wood, are of a coarser pulp, and tend to yellow with age. "Consumer grades" usually contain no ground wood and so are less susceptible to yellowing. Colored or tinted paper products tend to fade after two years. Facial tissue and toilet tissue will last for years, although paper manufacturers suggest you store them for no longer than five years. Manufacturers do not indicate a specific length of time for storing paper towels and napkins, but since they contain "wet strength resins," they lose their softness, their absorptive qualities, and become brittle in a few years. Among the most sensible items to stockpile are the things you consume in the greatest quantities. This would usually include paper towels, toilet paper, wax paper, plastic wrap, aluminum foil, paper plates and cups, notebook paper, gift wrap, and perhaps disposable diapers. Clothing & Softgoods When considering clothing, the primary question is one of fashion. Stockpile only those items that you know you will not object to wearing five, ten, or twenty years from now, no matter how styles may change in the meantime. At first glance, it might seem that there would be little in this category that wouldn't go out of style, but on closer examination you will probably find a great many items that you regularly wear which never change. The average man should be able to stockpile a ten- or twenty-year supply of socks, underwear, work pants and shirts, t-shirts, handkerchiefs, sweaters, and pajamas, as well as protective gear such as raincoats, overcoats, and umbrellas. Even though a man may not want to buy a twenty-year supply of shoes, it still makes sense to buy three or four pairs at a time, especially if he tends to buy the same styles. Every woman could stockpile pantyhose, bras, slips, socks, nightgowns, robes, as well as housedresses, slippers, and sweaters. In addition to clothing, there are many areas of the home where fabrics are used. Softgoods represent one of the best areas for storing value. Consider stockpiling at least a twenty-year supply of face towels, bath towels, dish towels, sheets, pillow cases, pillows, blankets, and bedspreads. Automobiles, Gasoline, and Accessories Storage space and styling taken into account, you may decide to buy an extra new car this year and put it up on blocks. Five years from now, you might find yourself very pleased with your foresight, both from the standpoint of the price increases you avoided and from the quality changes that occur. In many products, particularly automobiles, the new models do not always represent improvements on the old ones. Not only does inflation tempt the manufacturers to reduce quality instead of increasing prices, government safety and pollution requirements seem to force the auto makers to produce lower powered, higher maintenance-cost cars each year. When you buy a new car, stock up on all the replacement parts that you are likely to need over the life of the vehicle. This would include extra fan belts, radiator hoses, spark plugs, ignition sets, air filters, oil filters, batteries, brake shoes, and tires. The batteries will stored dry. Since battery acid might be dangerous to store, and is relatively inexpensive anyway, it could be purchased when you are ready to activate the battery. All of these parts have indefinite shelf lives, and will do nothing but go up in value. If you drive a hard bargain with the salesman when you buy the car, he may provide the parts at dealer cost. When buying tires and batteries in advance, you must arrange for the guarantees to be initiated when these parts are actually installed on the car. If you promise to let the dealer be the one to install them, he will probably agree. The gasoline shortage has made many people consider storing gasoline. This would appear to be a very smart move but there are drawbacks. First, gasoline manufacturers point out that gasoline does not store well. Chemicals in the fuel break down, and the maximum storage life is only about one year. After that it still burns, but it does not have the octane rating the modern high-performance engine requires. The second problem is storage. You need the room and the equipment to put it away. Assuming you have two cars, drive about 15,000 miles per year in each vehicle, and average 15 miles per gallon, you will use 2,000 gallons per year. A 2,000-gallon tank will cost you approximately $4,000 to install, complete with pump. In most areas, you'll need a building permit from your local bureaucrat, as well as permission from the fire department. The tank companies that service your area will be able to determine whether the acidity of your soil requires any special coatings on the tank. If you do decide to install a tank, get through the tangle of bureaucratic red tape, and get it functioning, you can expect to save about 10 percent on your gasoline costs by buying in large quantities, plus having the inflation protection on the gasoline between the time you buy it and the time you use it, which, if you buy a year's supply, should average about six months. The dollar savings may be a small benefit compared to the convenience of avoiding the lines at the gas stations. Do not assume that you will completely avoid shortages if the energy situation deteriorates. You will be required to let the Department of Energy know about your tank, and they will determine how big a gasoline allocation you can have. If rationing is instituted, you can bet they will see to it that you do not benefit from your foresight. Motor oil is another auto product that you should consider storing. Again, the oil companies claim that the detergent oils have a shelf life of about two years. Non-detergent oils, such as Quaker State, and Pennzoil have indefinite shelf lives. If you drive 15,000 miles per year per car, you should use about ten to fifteen quarts per year per car. A two-year supply of detergent oil would therefore be about thirty quarts, while if you use non-detergent, you could stockpile up to 200 quarts per car. You can save some money by buying the oil in gallon containers. Don't forget to stockpile anti-freeze, brake fluid, transmission fluid, and all the polishes and waxes you'll be using. Miscellaneous Alpha Items Besides the standard categories of goods above, there are many interests individuals have that offer opportunities for investing substantial sums. Sports, recreation, and hobbies are fertile areas in which to find stockpiling opportunities. Whether it is exercise equipment and clothes, camping gear, photographic supplies, golf balls, or woodworking equipment, each person's particular interests should be explored and integrated into the Alpha Strategy. Don't forget that you can stockpile gifts to be given away in the future. Think forward to birthdays, anniversaries, graduations, and religious holidays. With a little forethought, you'll probably find that you can buy your gifts at least a year or two in advance, if not longer. It will save you a lot of shopping time, relieve holiday pressure, and beat inflation to boot. Sources of Supply Once you've embarked on Level Two of the Alpha Strategy, and you've selected the items and quantities that are appropriate, you'll be ready to locate sources of supply. You'll find a variety of different distributors for products, including retail stores, discount stores, cooperatives, catalog suppliers, wholesalers, jobbers, industrial suppliers, and the manufacturers themselves. Which you use will depend on the quantity of the item you use, whether you insist on a brand name, and the proximity of the source. The large supermarket chains are a reasonable source for bulk purchases of food and drug items. They buy in huge quantities at maximum discounts, and operate on narrow profit margins. While most of them will not offer case discounts, their prices are so low on some items that you won't need them. The grocery business is extremely competitive, and grocers learned long ago that they could attract shoppers into their stores by advertising special prices on common items. A market will frequently offer loss leaders at below cost in order to bring you into the store. Since the grocer may be selling below his cost on some staple, he might limit the quantity to each customer. Don't expect the grocer to thank you for buying ten cases of some product that he's letting go at cost. He's had to buy the stuff, move it around, and deliver it to you, at no profit. Your best bet, in order to retain his good will, is to tell him what you're doing and offer to pay him a handling fee for any items he's selling to you at cost. A few discount department stores also handle food items and should be checked for price comparisons. In our area, the lowest prices for regular household items are found at a local membership discount store. It consistently beats even the largest supermarket chains for most items, and in some cases sells for well below what those markets must pay for the same items. A couple of places that appear to be inexpensive, but which actually are often higher than supermarkets on nonfood drug and grocery items, are the discount drug chains, cash and carry wholesale grocers, and national retail department stores. As an Alpha Strategist you will have to check different sources in your area for the best prices on each item. Just to help you recognize how profitable this might be, in Table 1 I've listed price comparisons on a dozen Alpha items priced at different types of retailers in the Los Angeles area. Table 1
You'll notice I've included the wholesale price of most items, and you'll find that some items can be purchased at prices below wholesale. This can happen for a number of reasons. Some retailers may make direct purchases from manufacturers, thus bypassing the wholesaler. Some may sell certain items at a loss to attract customers. There are often special deals made by wholesalers and manufacturers on certain items. In any case, you can see from the following price comparisons that there are great opportunities for savings just by doing a little shopping. Incidentally, these price comparisons were made in early 1980, and all in the Southern California area. They aren't intended to indicate what you would be able to buy these things for in your area at the time you read this. Take one of the items from my list with the lowest percentage differential between retailers - toothpaste is an example. If your family uses twelve tubes per year, you'll use about 120 tubes in the next decade. Since the price variation is around 25 percent on toothpaste and a tube sells for a high of $1.38, your potential saving is thirty cents per tube, or $36.00 for checking just that one price! Since you should be able to check prices of at least fifty items in one day's effort, you could earn as much as $1,000 or more for that one day's work. Brand Name Versus Private Label Private label merchandise is not a new phenomenon. Sears, Safeway and many other retailers have always had their own brands of merchandise. Although these products are often manufactured by the same companies that put out the nationally advertised brands, and frequently are identical to those brands, the prices are usually lower. The major reason private label articles are cheaper is that they do not carry the enormous advertising costs which weigh down the brand name goods. When a manufacturer is calculating the margin of profit on his main line, he adds in advertising, marketing, and special promotion costs, as well as his actual production and overhead costs. If a retail chain places an order for private-label products, the manufacturer excludes marketing and promotion costs when arriving at a price. The business is good for the manufacturer, as it pays him a profit and keeps his manufacturing facility operating at higher production levels, thus amortizing his fixed overhead over more units of production. It is good for the retailer, because it allows him to offer his own brand at a lower cost than the national brand, and thus attracts more costconscious customers. It's good for the customer, because it offers him lower prices. When you are planning your Alpha portfolio, compare the quality and cost of some of the private label brands against the national brands you've been using. You may be pleasantly surprised. Larger Containers Mean Savings Everyone realizes that smaller containers result in a higher cost per unit of volume. In this day of mass production and fancy packaging, the package itself is often the major cost. Always buy the largest size you can conveniently use; if this turns out to be the industrial or institutional size, your savings can really add up. In the case of canned goods, restaurants will usually buy things like canned fruit, olives, condiments, spices, etc., in gallon or five-gallon jars or cans. As a single consumer you can't normally take advantage of these larger containers, since you don't consume that much of one item at one sitting. A number ten can of peaches, for example, contains six pounds of fruit. It sells at about 20 percent less per pound than the smaller can, but the average consumer would probably throw at least 20 percent of the larger can away. An alternative would be to buy the large size, open the can, and freeze what you don't use in small containers, so you can use it a bit at a time. Professional beauty supply stores offer excellent values for Alpha Strategists. Take shampoo, for example. A local beauty supply store offered a one-gallon jug of Breck shampoo for $8.95 (less 10 percent to regular customers). At the same time, local drug and grocery stores were selling 16-ounce bottles for $2.50, which is the equivalent of $20.00 per gallon. Since a family of four can go through as much as two gallons per year, buying a ten-year supply at a beauty supply store would save a family about $250, in addition to the inflation protection gained by stockpiling. Putting this in an investment perspective, an equivalent investment would have to be risk-free yet provide you with a tax-free, fully inflation-adjusted cash flow of 25 percent per year. How can you lose? The moral is, buy the large institutional sizes whenever you can. Get your beauty supplies from a beauty supply shop, your cleaning fluids and soaps from a laundry supply outlet, and your staple food items from a restaurant supply store. A note of caution. Always check prices. Never assume that an item is competitively priced merely because the sign over the door says "wholesale." In the "cash and carry" wholesale outlets which cater to small grocery stores and restaurants, the regular consumer sizes may be just as expensive as they are in the large supermarket chains. In some cases, event he institutional sizes are more expensive. It pays to compare. Storage Once you've decided to become an Alpha Strategist, you'll need to think about the storage problem. The amount of room you need will depend on the amount of money you have to invest, and the type of goods you decide to stockpile. Since goods usually come packed in cardboard boxes of specific dimensions, it's possible to develop a rough estimate of storage requirements by figuring out the average cost per cubic foot of the goods you'll be buying, and dividing that figure into the total amount of money you intend to invest in goods. To give you an idea of how much space cases of Alpha items might take up relative to the cost of those items, Table 2 offers some examples. The value per cubic foot figures were calculated by dividing the item's average retail price by the carton's volume. Table 2
Assuming that the average value per cubic foot of goods you'll be storing is $25.00, then a $10,000 stockpile will require 400 cubic feet of space. It could be kept in a space four-feet deep by seven-feet high by fourteen-feet long, or roughly a four-foot deep storage area built along the wall of your garage. There are a number of considerations as to where and how you store your goods. High temperatures, humidity, and light are the principal enemies of any type of goods. Most deterioration comes from chemical changes, and most chemical reactions increase as temperatures increase. In addition, certain rays present in light cause chemical changes. Light fades many dyes and causes other forms of physical deterioration. Humidity can increase oxidation, can cause molecules to bond together (as when sugar and salt cake up), and can provide an environment conducive to the reproduction of fungus, insects, and other destructive pests. The ideal storage system will minimize deterioration by providing a cool, dark and dry environment for your goods. The storage area should be arranged so that cartons are not stacked directly on cement floors or against cement or brick walls, since moisture will seep through. If convenient, the storage area can be completely lined with inexpensive plastic sheeting to ensure it will be moisture-proof. The area should be free of cracks and holes to prevent insect and rodent entrance, and insect repellents and poisons (moth balls, ant powders, etc.) should be placed in the area to take care of any organisms that do get inside. Remember, however, that you shouldn't put any aromatic substances in areas where you'll be storing liquors. Since light is an enemy to your goods, avoid the temptation to store them on open shelves and take the trouble to install some type of cover such as sliding panels or doors. For goods particularly vulnerable to moisture, you may want to seal the individual cartons with wax, plastic, or some other waterproof material prior to storing them. Besides protecting the goods from deterioration, you're also concerned about pilferage from neighborhood children and loss to burglars. The best protection in this regard is to avoid broadcasting the fact that you have a substantial stockpile, and to make certain the storage area is securely locked. You can also consider camouflaging your storage area in hopes that intruders won't be aware of its existence. This could be done by constructing a false wall, a hidden door in a closet, or the like. It would be inexpensive and easy to install a burglar alarm that would scare the burglar away and alert you or your neighbors to a break-in. There are a number of areas in the home that can be considered for your cache. If your home has a basement, it could be the very best location, provided you don't anticipate any type of flooding. Basements tend to stay cooler all year long, are less vulnerable to break-in, and are out of the way. The main drawback will probably be moisture. You'll need to raise your goods off the damp cement floor, and seal the walls thoroughly to prevent damage. Attics are another potential storage area, as are the crawl spaces between the ceilings and roofs of most single-story houses. The major drawback to these areas is temperature, so only those goods not affected by temperature should be stored there. This is the ideal area to store those goods affected by moisture, since these spaces are usually dry. A good idea for that crawl space above the ceiling is to install two 2 x 4-inch "tracks" the length of the area, and build simple platforms on rollers to ride the tracks. You can load your goods onto the platforms and then run them back and forth on the tracks with ropes. This method will eliminate your need to crawl around in that cramped area when you want to store or retrieve your goods. The garage is an obvious storage area, but it has its drawbacks. First, it is usually easily broken into and very convenient for the thief, since he can back his truck right up to your goods. The garage is often poorly insulated, so heat and moisture may be more of a problem. Many other spots can be found in the average home, and unless a very large stockpile is held, a little careful organization of your present belongings can result in room for a fairly large cache right in the nooks and crannies of the main living areas. Cases and individual items can be stored in closets, under counters, under beds, under tables, and in unused bedrooms. Once the possibilities for storage in the home have been exhausted, and you still have goods to store, there are many options still open. You may have a relative or close friend who has substantial spare storage space he would give or rent to you; you can rent space at a commercial warehouse or in one of the new mini-storage units; and, in some cases, you may be able to leave the merchandise with the merchant from whom you've purchased it by paying him a small storage charge. Survey your home and decide what is available without construction or remodeling, make rough estimates of what any storage space construction might cost, and finally compare this cost with the cost of renting separate storage facilities. While the costs of outside facilities will vary from place to place, at early 1981 price levels, you should be able to rent space for no more than $3.50 per square foot per year. Assuming you could stack your goods seven feet high, the storage cost is fifty cents per cubic foot per year. Thus, if your goods are valued at an average of $25.00 per cubic foot, you will be paying about 2 percent of value per year for storage. An analysis of the cost of storage will soon convince you that the most practical Alpha items are those with the highest value per cubic foot. Insurance The risk of losing your investment values through theft, fire, or any other natural disaster is something you may want to cover through insurance. When should you insure? Whenever losing the goods would cause you an economic loss which would affect your standard of living in any significant way. For example, if your total investment assets are $10,000, losing them would mean a significant reduction in your standard of living, either now or when the point comes at which you would be consuming those goods. Since the loss is significant to you, you should cover it with insurance. If you have a net worth of $250,000, however, and have $10,000 in Alpha Strategy goods stored at home, their loss would probably not affect your standard of living. In this case, you would not insure. This concept of insuring only when a loss would affect your standard of living is derived from the fact that insurance companies charge rates higher than the statistical probability of a loss, and thus they profit. by acting as your own insurance company in those cases where you are financially able to absorb the loss, you stand to earn that profit. Whether you insure with an outside company, or insure by taking the risk yourself, recognize that there is a cost involved. The cost of insurance will depend upon your location (fire rates, for example, are determined by the probability of fires in different areas), and the amount of goods you'll be covering. If you own your home and carry homeowner's insurance, you probably have coverage on the contents of your home. Most homeowner's policies cover contents to 50 percent of the coverage carried on the structure itself; thus, if you carry $100,000 on the structure, you could receive as high as $50,000 on the contents in the event of a loss. If your Alpha items raise the total value of the contents of your home above the content limits of your homeowner's policy, you'll need to add coverage. If you're a tenant, you can purchase a renter's policy that covers your belongings, but not the structure of the building. Again, the cost will vary by area. Most policies cover just about any type of loss except earthquake and flood losses. If you want insurance against these losses, you'll need special endorsements, or separate policies. Earthquake insurance will probably run $2.00 per $1,000 of value, or less. Flood insurance is available only through the federal government. Although costs of homeowner's and tenant's policies vary from company to company and from area to area, you can assume that insurance on your cache of goods will cost somewhere around $5.00 per $1,000 of value per year. This means that you'll be spending about one-half of one percent of the value of the goods each year for insurance. It's inexpensive, but remember, don't buy it unless you really need it. If you decide to store your Alpha items in a mini-warehouse, or in some other place off your premises, you'll need a separate policy. This type of policy is a bit more expensive than a tenant's or homeowner's policy, and will probably cost you about $12.00 per $1,000 per year, or about 1.2 percent of the value of the goods annually. When insured, you should be prepared to make a claim that will not be turned down by the insurance company. The thing the insurer wants is reasonable proof of loss. In order to verify a loss, you'll need evidence that the goods really did exist. (This will hold true whether you're dealing with an insurance company, or trying to substantiate a casualty deduction on your tax return.) The Alpha Strategist should keep an inventory of the goods in his stockpile, and should also keep all receipts for those goods so that their value can be verified. Since stockpiling is a rather unusual pursuit, I would suggest you invite your insurance agent to your house and show him what you're doing. Explain your inventory system, and ask him how he would suggest you prepare yourself for the possibility of a loss. When discussing the problem with your agent, make it clear that you want insurance on the replacement value of the goods, not on their cost. If you've had the goods for some time, those goods will have increased in value significantly, and you don't want to be stuck with insurance that only gives you back what you originally paid (or less). Conclusion Everyone should have a personal savings account of consumables, whether he has $500 of investment capital or $5 million. It is not just a system for protecting investment dollars against the ravages of inflation, taxation, and market risk. It is a time-saving, convenient, and rational method of living. The goods you buy and stockpile will be unique to you, and will fit your own particular situation. The items mentioned above are meant only to stimulate your thinking and offer a few general guidelines. You'll no doubt discover many other things you can store away, while rejecting many of the things I have mentioned. Just keep in mind that the most important items are those with the highest value per cubic foot. You might also think about the potential scarcity of certain items in the future, and make certain those items are included in your portfolio. Remember, however, that the idea behind the Alpha Strategy is not to prepare for shortages or disaster, but merely to protect dollars against inflation.
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Once you have invested as much of your available capital as you can in education, tools, supplies, and facilities for production, the next logical place to put your savings is into those goods that you and your family will consume in future years.
John Pugsley is chairman of 