Return On Investment

When I was living in Colorado, my father started raising emus on his ranch near Castroville, Texas. The price of beef had been so low over the last few years, he had decided to diversify his stock and try something new. I didn’t know anything about emus except that they looked like ostriches, but they were all the rage according to my dad, because 100% of the animal could be processed for something. Whether oils for perfume or the hides for leather goods, nothing was to be wasted when he took them to market.

He called me one day to make his sales pitch. My dad had always been a salesman and when my brother and I began to make our own money, we were then potential customers. He told me if I gave him $5,000 this year, he would return $10,000 to me next year. The initial investment would buy a female emu and when she had a chick, the pair could be sold for double that amount. Not a bad deal especially compared to some of the stocks I’ve purchased over the years. Dad said he would take care of everything from feeding it to taking it to market.

I began to wonder just how much of my initial investment would really go to purchase the female bird. Knowing my dad, I imagined only $3,000 of my money would be used to actually buy the bird while the rest would be used feed and care for it. Fair enough, I thought, but since he was raising dozens of pairs already, I surmised my money was just another way for him to generate cash flow until he took them to market. Then I wondered exactly how much money the pair would fetch when sold. My dad doesn’t miss any opportunity to make a buck. If he sold the pair for $12,000 and paid me $10,000 he would have made $4,000 off my $5,000! OK, so again I thought, he was incurring the expense to raise it and take it to market, why not just let him make the profit and accept the doubling of my investment?

So I thought about it for a week or so and when we spoke again I decided to keep my money. I’ve had friends and relatives ask me why I didn’t jump at the chance to double my money. I remember my aunt, my dad’s sister-in-law, had the same sales pitch tossed to her. She did a little research because she knew as much about emus as I did. She called them chickens since they are a flightless bird. But I also knew that whatever you want to call them, they are still a bird and birds die. “An emu is a chicken, a chicken is a bird and birds die!” I once told a friend of mine. I just wondered what would happen if one actually did die once my investment was made. “Don, this is dad” the imaginary phone call would have started. “One of the emus died last night and unfortunately it was yours. Sorry about that. Better luck next year.”

Sometimes the best investment is the one you don’t make. Although the ROI is 0, at least it’s not negative.