Last week I wrote a post titled, Is reciprocal buying a good strategy? To sum it up, my strategy from the start has always been to invest in the stocks that produce the best ROI (return on investment) and to sell stocks when I believe I can get a better return by investing those eaves elsewhere. But there are a lot of benefits to a reciprocal buying strategy in which I would buy and hold the stocks of those who buy and hold mine. I listed 5 benefits of reciprocal buying strategies in that post.

The post generated a lot of great feedback and discussion. Most people seem to advocate reciprocal buying, at least in theory, but most also said they wouldn’t necessarily buy back if the other player’s ROI was really low and wouldn’t necessarily hold if the other players share price and/or dividend really tanked.

The bottom line: there are few if any people who have a pure ROI strategy or a pure reciprocal buying strategy. Most have some sort enigmatic hybrid. A strategy that has few hard and fast rules and a lot of gut-level decisions.

So, where did I go from there?

Yeah, time for another experiment!

I decided last Wednesday I would do 5 things:

  1. Buy back, share for share, every person who invested in me. The only exception being that I only have pie to go up to 350 shares, so I couldn’t match above that.
  2. Not sell off anyone who was invested in me as long as they are active in the game. Just to be clear, if I held more shares of someone than they held of me and their share price or divs were taking a dive, I could sell down to the number of shares they had of me but not below.
  3. Check out the TeamZen and [X]Bar communities to see how the people in them help each other.
  4. Participate in Pendapolooza V
  5. Participate in the #2powerN group

What happened? In the 8 days since…

  • My outstanding shares went from under 170k to over 200k
  • My share price increased from 121 to 131
  • Combining increased share price and dividends my investors earned more than a 20% return in the last 8 days.

It’s probably the best 8 day run I’ve had since I’ve been on EAv. The reciprocal buying experiment has been an unquestionable success!!!

However…

It’s unsustainable.

I’m bringing in about 140,000 eaves a day in portfolio dividends. I’m earning another 60,000 or so eaves from ~4500 shares a day purchased by investors. So, I have 200,000 eaves to buy back 4,500 shares. If the average price of the shares I was purchasing was around 40e, that would work. But the reality is the average share price of the people buying my shares is closer to 80e. I’m spending 400,000e to 500,000e a day to reciprocate share purchases.

I’ve been able to make it work so far buy selling shares of people who leave the game or have low ROIs and haven’t bought any or my shares. But I’m running out of those stocks in my portfolio. It seems like only a matter of time before I will start getting behind on my reciprocal buys. (I should say more behind, since I haven’t been able to reciprocate those buys of more than 350 shares)

But until then, I’m going to keep on going with the reciprocal buying. You can’t argue with the results!

How about you? What’s your strategy with regards to buy back shares of those who invest in you?