Polarizing Marketing & Nike

Yes, I created my own polarizing marketing movement to test Nike’s controversial advertising campaign. 

On September 3rd, Nike began one of the most notorious advertising campaigns in recent memory when they revealed Colin Kaepernick as the face of their 30th anniversary “Just Do It” slogan.  Many customers responded by burning their Nike apparel, while others endorsed—even applauded—the company for their allegiance

To understand what drove Nike to do this campaign – the attention, polarization, and perception – I decided to experiment with a divisive campaign of my own by using three articles on Facebook:

I utilized three ads with the same words except for the introduction. The first was a Liberal article starting with “Colin Kaepernick is my Hero!...”, using a Control article that says, “See Why Guns are on My Mind!”. The conservative article originally started with, “Police Brutality is Fake News!...”, but was flagged by Facebook as, “related to politics or issues of national importance”. It was later replaced by another equally-conservative article starting with “Colin Kaepernick Needs to Grow Up!...”.

The ads then linked to half-written articles that, upon first-glance, were very polarizing.  Each article ends by explaining that my personal views have not been conveyed, but that each ad’s performance would be tracked and used for this month’s newsletter. 

While I wanted to mirror the same point of contention, or rather polarization, as Nike, namely Colin Kaepernick, I also wanted to steer the subject back to finance. I chose stocks that manufacture or sell guns as my financial advice piece, but kept the demographics for the ad fluid.  I chose to market all three ads to anyone in Michigan ages 24-64.   

What happened next was predictable, yet hard to endure.  Unlike Nike, my polarizing ads went out to all ends of the spectrum, and unlike Nike, I did not stand behind what the ads were saying, nor did I want to defend a position publicly.  This led to a lot of anger and some organic sharing.  People commented saying, “You can take this white power s**t and shove it up your ***” and, “Another li**ard do**he shoveling BUL***IT”. 

At this critical juncture, I would like to to apologize to any of you who may have come across the title without time to read the article and subsequently suffered offense by it. For me, the final straw was after my article was shared with “No matter what is said, he will forever be a racist POS”… it was then that I felt the campaign needed to end.  With that, I have crunched the numbers resulting from this short campaign.

What did the numbers say?  Well, the test originally had a liberal, control, and conservative ad, however, only the liberal and control were initially approved by Facebook, so another split test was launched with a new conservative article and the same control.  Each ad had varying amounts of time to reach its audience and generate clicks, but neither split test lasted long enough for Facebook to determine what ad was doing a better job of getting clicks for the lowest price.  However, the numbers are hinting at Nike’s thought.  Taking a strong position not only gets you mentioned in the newspapers, it also generates organic sharing and drives your marketing costs lower.

The first test compared the Liberal and Control Articles:

  • Dollars spent on Promotion

    • $24.73 LIberal

    • $25.28 Control

  • Reach

    • 2,627 People, Liberal

    • 2,542 People, Control

  • Link Clicks

    • 189, Liberal

    • 96, Control

  • Cost Per Click

    • $0.13, Liberal

    • $0.26 Control

The second test compared the Conservative and Control Articles:

  • Dollars spent on Promotion

    • $10.41 Conservative

    • $25.28 Control

  • Reach

    • 998 People, Conservative

    • 2,671 People, Control

  • Link Clicks

    • 55, Conservative

    • 87, Control

  • Cost Per Click

    • $0.19, Conservative

    • $0.24 Control

Looking at Google trends, we can see the obvious spike in attention Nike received when the campaign was released.

Originally, however, Nike’s share price took a dive upon Kaepernick’s release and even today it appears the jury is still out regarding the decision.  Here*, I compare Nike and its industry benchmark, S&P 500 Ind/ Textiles & Apparel TR, from 09/01/2018 - 10/03/2018, and you’ll notice slim to marginal upside for Nike. 

What does this mean?  In my professional opinion, it means that while they achieved a boost from the initial attention, they may be in trouble if their previous consumers boycott them for a prolonged period.  This begs the question of why they ever took a side in the first place.  While my case study was small and limited, I hope Nike had greater proof of concept and can continue to bring value to their shareholders.

*Performance Disclosure

The performance data quoted represents past performance and does not guarantee future results. The investment return and principle value of an investment will fluctuate, thus an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than return data quoted herein.

Disclaimer: VanderPol Investments is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

The ABCs of Education Investing

With school back in session in most of the country, many parents are likely thinking about how best to prepare for their children’s future college expenses.

Now is a good time to sharpen one’s pencil for a few important lessons before heading back into the investing classroom to tackle the issue.


According to recent data published by the College Board, the annual cost of attending college in the US in 2017–2018 averaged $20,770 at public schools, plus an additional $15,650 if one is attending from out of state. At private schools, tuition and fees averaged $46,950.

It is important to note that these figures are averages, meaning actual costs will be higher at certain schools and lower at others. Additionally, these figures do not include the separate cost of books and supplies or the potential benefit of scholarships and other types of financial aid. As a result, actual education costs can vary considerably from family to family.

Exhibit 1

Adding Tuition, Fees, Room and Board together the total cost of attendance is:

  • $20,770 for Public Four-Year In-State

  • $36,420 for Four-Year Out of State

  • $46,950 for Private Nonprofit Four-Year

    *Source: The College Board, “Trends in College Pricing 2017.”

To complicate matters further, the amount of goods and services $1 can purchase tends to decline over time. This is called inflation. One measure of inflation looks at changes in the price level of a basket of goods and services purchased by households, known as the Consumer Price Index (CPI). Tuition, fees, books, food, and rent are among the goods and services included in the CPI basket. In the US over the past 50 years, inflation measured by this index has averaged around 4% per year.[1] With 4% inflation over 18 years, the purchasing power of $1 would decline by about 50%. If inflation were lower, say 3%, the purchasing power of $1 would decline by about 40%. If it were higher, say 5%, it would decline by around 60%.

While we do not know what inflation will be in the future, we should expect that the amount of goods and services $1 can purchase will decline over time. Going forward, we also do not know what the cost of attending college will be. But again, we should expect that education costs will likely be higher in the future than they are today. So, what can parents do to prepare for the costs of a college education? How can they plan for and make progress toward affording those costs?


To help reduce the expected costs of funding future college expenses, parents can invest in assets that are expected to grow their savings at a rate of return that outpaces inflation. By doing this, college expenses may ultimately be funded with fewer dollars saved. Because these higher rates of return come with the risk of capital loss, this approach should make use of a robust risk management framework. Additionally, by using a tax-deferred savings vehicle, such as a 529 plan, parents may not pay taxes on the growth of their savings, which can help lower the cost of funding future college expenses.

While inflation has averaged about 4% annually over the past 50 years, stocks (as measured by the S&P 500 Index) have returned around 10% annually during the same period. Therefore, the “real” (inflation-adjusted) growth rate for stocks has been around 6% per annum. Looked at another way, $10,000 of purchasing power invested at this rate over the course of 18 years would result in over $28,000 of purchasing power later on. We can expect the real rate of return on stocks to grow the purchasing power of an investor’s savings over time. We can also expect that the longer the horizon, the greater the expected growth. By investing in stocks, and by starting to save many years before children are college age, parents can expect to afford more college expenses with fewer savings.

It is important to recognize, however, that investing in stocks also comes with investment risks. Like teenage students, investing can be volatile, full of surprises, and, if one is not careful, expensive. While sometimes easy to forget during periods of increased uncertainty in capital markets, volatility is a normal part of investing. Tuning out short-term noise is often difficult to do, but historically, investors who have maintained a disciplined approach over time have been rewarded for doing so.


Working with a trusted advisor who has a transparent approach based on sound investment principles, consistency, and trust can help investors identify an appropriate risk management strategy. Such an approach can limit unpleasant (and often costly) surprises and ultimately may contribute to better investment outcomes.

A key part of maintaining this discipline throughout the investing process is starting with a well-defined investment goal. This allows for investment instruments to be selected that can reduce uncertainty with respect to that goal. When saving for college, risk management assets (e.g., bonds) can help reduce the uncertainty of the level of college expenses a portfolio can support by enrollment time. These types of investments can help one tune out short‑term noise and bring more clarity to the overall investment process. As kids get closer to college age, the right balance of assets is likely to shift from high expected return growth assets to risk management assets.

Diversification is also a key part of an overall risk management strategy for education planning. Nobel laureate Merton Miller used to say, “Diversification is your buddy.” Combined with a long-term approach, broad diversification is essential for risk management. By diversifying an investment portfolio, investors can help reduce the impact of any one company or market segment negatively impacting their wealth. Additionally, diversification helps take the guesswork out of investing. Trying to pick the best performing investment every year is a guessing game. We believe that by holding a broadly diversified portfolio, investors are better positioned to capture returns wherever those returns occur.


Higher education may come with a high and increasing price tag, so it makes sense to plan well in advance. There are many unknowns involved in education planning, and no “one-size-fits-all” approach can solve the problem. By having a disciplined approach toward saving and investing, however, parents can remove some of the uncertainty from the process. A trusted advisor can help parents craft a plan to address their family’s higher education goals.

Source: Dimensional Fund Advisors LP.

All expressions of opinion are subject to change. This information is intended for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Diversification does not eliminate the risk of market loss. Investment risks include loss of principal and fluctuating value. There is no guarantee an investing strategy will be successful.Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. The S&P data is provided by Standard & Poor’s Index Services Group.Higher education may come with a high and increasing price tag, so it makes sense to plan well in advance. There are many unknowns involved in education planning, and no “one-size-fits-all” approach can solve the problem. By having a disciplined approach toward saving and investing, however, parents can remove some of the uncertainty from the process. A trusted advisor can help parents craft a plan

[1]. Source: US Department of Labor, Bureau of Labor Statistics, Economic Statistics.

How 0.00% is Setting the Bar

A milestone has been achieved in the financial industry as Fidelity has introduced new zero net expense ratio index funds.  FZROX and FZILX will be setting a new standard in the mutual fund and ETF world as the race to 0.00% has concluded.  iShares, Vanguard, Schwab and more have been cutting fees in an attempt to remain competitive within the current market environment, with the lowest fees often seeing significant investor inflows.  Fidelity, though a little late to the game, is now the first to offer 0.00% expense ratio index mutual funds. 
However, what does this mean for you?  Well, if you have taken part in the same funds for the last 10 (or even 5) years, it may be time to re-evaluate and make sure you’re getting what you’re paying for in this industry.  Studies have suggested that paying more for mutual funds has not resulted in a greater chance of beating an index, and if you’re still paying over 1% for your mutual fund managers, you’ll obviously want to know why.  If, however, you’re tempted by the infinitely lower expense ratio Fidelity now offers, and you have been updating your investment selection, or use an advisor who does this for you, consider a few things before making the move.  If you are in a taxable brokerage account, selling your investment and moving into a Fidelity fund will likely result in a taxable gain.  Paying this gain now will more than likely offset your savings by reducing your investment.  You might also want to consider transaction fees.  If you’re moving $1,000 to take advantage of the fee, but pay a fee to get there, it may not make sense.  Finally, if you’re already paying only 0.03% using a Schwab ETF or otherwise, do you really want the hassle of moving money around when it only costs $3 per year for every $10,000 invested? 
While a 0.00% net expense ratio is shocking to see, it no longer represents a material change in fees.  It represents a temptation but making a move will not make sense for everyone.  It does give rise to a new question: Will we ever be paid to use a mutual fund like we are for bank accounts?

Morningstar US Fund Fee StudyApr 2018.PNG

HSAs--More Than Just a Bank Account

When I think about retirement, I like to think about the good times I’ll be having.  I think about the sports car I’ve waited to buy, the joy I hope to bring on long-term mission trips, or that vacation that has always been set aside as “someday.”  What I don’t think about is “How am I going to pay for Medicare?” However, if you’re like me, we’re not thinking about the good and the bad parts of retirement, and we may be missing out on the best ways to save.

Right now, the “typical” retiree expenses related to healthcare are often as much as $500/month, $1,000/m for a couple.    According to Fidelity, a couple retiring in 2018 would need an estimated $280,000 to cover healthcare costs alone.  With numbers this high, we can expect healthcare related expenses to be a significant portion of our retirement.  So, what can we do about it?

Using a Health Savings Account (HSA) can help us prepare for this uninspiring yet unavoidable aspect of retirement in a more effective way.  Most people use HSAs as a bank account in conjunction with their High Deductible Health Plan (HDHP).  They put money in at the beginning of the year, and take it out as medical expenses occur.  This, however, is a shame.  Unlike Flexible Spending Accounts (FSAs), HSAs do not mandate that we spend all our money or lose it at the end of each year.  This opens the possibilities of over-funding the HSA and investing excess funds.  HSAs receive the tax benefits of a traditional IRA in that we receive a tax deduction for our contribution, and then grow tax-free, and, if used for qualifying medical expenses, distributions are tax-free, like a Roth IRA.  That is the tax advantages of both the traditional IRA and a Roth IRA, combined to make the best possible tax-advantaged account in America for qualified medical expenses.

With the benefits of HSAs being so obvious, you may be asking, “What’s the catch?”  This is a fair question. HSAs were created as part of the Modernization Act of 2003, with the basic idea of incentivizing individuals both to save for medical bills and pay attention to how much they are paying.  HSAs can only be contributed to in conjunction with a High Deductible Health Plan (HDHP), which requires that individuals have a minimum deductible of $1,350 (2018) or a family deductible of $2,700 (2018), and you cannot be enrolled in Medicare, other health coverage, or be claimed as someone else’s dependent.  While withdrawals for qualified medical expenses are tax free, nonqualified withdrawals will count toward taxable gains and, if you are under 65 years old, will result in a 20% imposed penalty as well. Ouch!

While these penalties can be off-putting, with a little planning we can avoid the penalties and enjoy the gains.  Running the numbers can be done several ways, but the preferred way to fund HSAs is concurrently with traditional retirement vehicles.  If your household income is $150,000 a year and you have a desired annual retirement income of $120,000 per year, take your expected health care expenses divided by your retirement goal ($12,000/$120,000) to find what percentage of your retirement investments should be held within an HSA.  In this case, 10% of retirement savings could reasonably be placed within an HSA and receive the best possible tax treatment.  If the same individual was saving 15% a year for retirement, the math could look like this:

·         Annual Income: $150,000

·         Annual Total Retirement Savings: $22,500

·         Savings Contributed to an HSA for Retirement: $2,250 (10% of yearly retirement savings)

·         Savings Contributed to an HSA for Current Medical Bills: $2,700 (Covers minimum deductible for a family)

If your numbers don’t look like the ratios presented, you may want to reach out to your financial advisor to find out what else can be done.  With a yearly limit of $6,900 for a family to contribute to HSAs, it can take some creativity to reach your goals, but with a little help, you can check the box on this mundane part of retirement and freely dream about the fun parts.  I’ve heard that New Zealand is nice during the Michigan winters, and I have always wondered what activities they offer…

Mark VanderPol, CFP®


Disclaimer: VanderPol Investments is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.