Passion Investing

Beyond financial returns and the blurring between consumption and investment

Last week, in the changing nature of investing I talked about the rise of alternative assets and how companies have made it easier for investors to put their money in them, and why it might be good for financial returns.

But financial returns aren’t even the only goal of investing for consumers. Increasingly, investing is becoming personal and a way to express one’s identity. It’s what I consider passion investing. This week I go deeper into that idea.

I cover:

  • The jobs to be done of investing

  • How different assets fulfill these jobs

  • Blurring between consumption and investment

The Jobs to be Done of Investing

Classic economic theory tends to assume that the goal of investing is to maximize risk-adjusted financial returns. That is typically the goal for institutional investors, but consumers are rarely that single-minded.

They have a variety of needs that investing can help fulfill. One way to think about these needs is through jobs to be done framework and consider all the various jobs that someone might “hire” an investable asset for.

Financial returns

This one is obvious and typically considered as the obvious reason to invest. While the risk/reward tolerance of people may be different, some sense of financial return (whether in the form of upside or downside protection) is a key job that assets are hired for.

Peace of Mind

Peace of mind is a common reason for choosing a specific asset, closely tied to financial return.

Some people want to protect the downside extremely, and so may “invest” in cash for that. Similarly, the choice of real estate, especially the first home, is often driven by some sense of security and peace of mind - no matter what happens, at least one will have a place to stay.


Consumers may choose to invest in an asset to express their identity and/or support the causes which are important to them.

People can choose to support the causes they care about through specific stocks such as someone passionate about climate change investing in Tesla or an Environmental ETF. Some people may buy handbags or sneakers to express their personality and style, knowing that these are retaining their value as investments as well. And the passionate sports fan might buy signed memorabilia or stock in their team if it is public (guilty!), even if they know it might not provide the best financial returns.

Good luck telling these individuals that they should buy the S&P index instead.


Another closely related reason to identity is that of belonging – investing typically with groups of people in a shared belief or cause for a sense of belonging.

The recent WSB x Gamestop saga is a great example of this. Sure, people wanted to make money, but another reason why at least some of them were doing this, was to be part of a broader mission to take down hedge funds or for most of them the less grand one of belonging to a broader group - WallStreetBets.


Assets such as Art, wine, and classic cars have always been a part of portfolios of the ultra-rich. Sure, the financial returns are one reason, but everyone knows they have a second job which is at least as important - giving the owner social status in the circles they care about.

The interesting part about status is the assets that provide it vary widely from circle to circle.

Art for example has long been seen as a good asset for both financial reasons and the status it conveys (and the signaling around refinement and culture it provides).

Much has been written about how in Silicon Valley, that status symbol is something different: angel investing. It suggests that one has the ability to do so financially, that one has a sense of taste (or the ability to pick companies), and that one has access or is in the know and has the ability to win allocations in deals.

NFTs are another example of this. Digital art and collectibles can be replicated easily but everyone knowing that you own a specific piece of digital art has some signaling value.


Fun and entertainment is another need that people may want to fulfill through investing.

It is no surprise that we saw a rise in day trading and investing in stocks during the COVID lockdowns, with many remarking that investing was the new sports betting with sports initially shut. This combined with communities such as WSB mean that stock investing or trading is more social and entertaining. The returns do matter, but for many, entertainment is a large part of the reason.

Similarly, many people collect sports memorabilia, trading cards, or try to snag the latest sneakers. For many people, that tends to be in large part driven by the fun and entertainment they derive from the collecting and trading of them as a hobby. The same is true for many of the people playing NFT based games such as Sorare.

Learning and Knowledge

Last but not the least, learning and acquiring knowledge is another key reason that people may choose to invest in specific assets.

This is commonly seen in consumers who actively invest in individual stocks. Yes, they obviously want to outperform the index, but they also derive value from continuing to refine their craft and acquiring knowledge about investing and the markets/spaces they invest in.

Similarly, many who angel invest also do so partly to stay plugged into innovation in industries and learn from and help those building the future in spaces they are interested in.

Beyond Financial Returns and Passion Investing

In last week’s piece, I touched on a variety of alternative assets, and how they are becoming more accessible than before, shown below.

A lot of these alternative assets allow for more than just financial returns in the jobs outlined above. They allow people to express themselves, learn new things, have fun, meet others and be part of groups, as I’ve summarized below.

Ultimately, while people want to make money, they also want these other things. And we’re starting to see that desire play out in people’s investing decisions. People are increasingly investing to fulfill a multitude of jobs rather than just financial returns. It’s what I consider Passion Investing.

The sneakerhead buying sneakers for the entertainment of being able to snag them when they “drop” and being able to express themselves when wearing them or showing them off to their friends. The group of people working together to invest in real estate to strengthen their friendships and learn about how that industry works. People YOLOing call options together as a group for entertainment and belonging.

Note that while the table above is in aggregate, different people may make the same investment for a different subset of these reasons. For example, one person might buy sneakers primarily because it is a core part of their identity and how they express themselves and secondarily from an investment perspective. Meanwhile, another person might enjoy the thrill of the drops and scavenger hunts to purchase the sneakers and so care about the entertainment aspect.

The blurring between consumption and investing

One of the other interesting things about this trend is that it also blurs the gap between consumption and investment, particularly around conspicuous consumption.

The money people earn is either consumed or saved/invested. The consumption bucket is typically to fulfill needs in the present, from basic needs of food, water, safety, and shelter to higher-level needs and desires of a feeling of accomplishment, belonging, and self-actualization. The rest is saved/invested so that people can ensure their needs are met in the future.

Now, for these higher-level needs, people typically spend money consuming goods and services such as luxury items, travel, parties, or hobbies.

But given the increasing accessibility of investable assets which can fulfill some of these needs, money “consumed” to fulfill these needs can now be invested to fulfill these same needs. People can entertain themselves by trying to grab the latest pair of sneakers instead of going to a bar or buy fractionalized art and NFTs instead of going on a fancy meal or trip for the status that the photos provide, or angel invest instead of going to school for the learning and networking.

It’s not like conspicuous consumption will go away, but passion investing may increase the pool of money that is considered investments vs consumption. And that can happen both because people might substitute some consumption spend for investments and because things that were considered “consumption” (fashion, wine) are increasingly viewed as investments given all the infrastructure around them which allows for trustworthy and liquid secondary markets to exist.

Thanks for reading! If you liked this post, give it a heart up above to help others find it or share it with your friends.


If you have any comments or thoughts, feel free to tweet at me.

If you’re not a subscriber, you can subscribe below. I send things related to technology and business once a week on Mondays.