Tuesday, June 3, 1997
The Investor's Green
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by
TMF 2Aruba
Last week was time to plant my vegetable garden. As I was sitting in the dirt, making holes in the soil for my plants and seeds, I started thinking about how planting a garden has similarities to investing. In fact, many people will undoubtedly put more thought into planning their gardens than their portfolios. There was a time when I fit that category, too.
Before you can enjoy the fruits of labor in a garden, you have to decide where and what to plant, and have the proper tools to maintain it. Then, finding the right plants -- those which are healthy and contain the promise of an abundant harvest -- may take many visits to local farms or nurseries until just the right choices are found.
Next, the careful gardener must decide how much of each plant will create the right balance at harvest -- a well-diversified garden. Sure, I love tomatoes, but there are plenty of other great crops available. Who wants nothing but tomatoes? Furthermore, what if this is a year that proves unfriendly to Beefsteaks and Big Boys. Suppose we have an unfriendly weather pattern, or it becomes the year of the aphids. Nope, we need to complement our tomatoes with other selections.
In my case, I balanced the tomatoes in my garden with a healthy helping of cucumbers, zucchini, string beans, and peppers, then filled in with a small selection of herbs, including mint, parsley, and basil.
Once I've made my selections, planted the seeds, and introduced the plants, it's time to begin nurturing and watching over my seedlings. Occasionally, a problem occurs and I have to trade one plant for another. Sometimes one plant will really thrive and start to take over an excessive amount of space in my garden. When this happens, I cut it back a bit. If one crop is not doing as well as I hoped, I'll re-evaluate its potential and, if necessary, find a replacement for it.
Selecting good investments follows a similar pattern. You need to be willing to get some dirt under your fingernails, some sweat on your brow. You wouldn't want to sit with just one stock in your portfolio, hoping for the right amount of rain, sun, and no aphids. Finding the right stocks, like plants, takes some time and some trial and error. After you pick some stocks that look good, you have to keep an eye on them and re-evaluate your choices periodically to keep the stocks with the best potential. Your stock picks should be based on research, using as many tools as you have available. For me, I read and investigate before I try my hand at a "new vegetable" so I know what to expect.
As you would for your garden, you'll want to be sure to keep track of how balanced your portfolio remains, making sure one investment doesn't begin to "crowd" all the others. Selecting the right investments should take at least the same enthusiasm and effort as your vegetable planting. Of course, some years the crops will be better than others, but by being prepared before I begin, and watching over the seeds I've sown, I feel confident that come harvest time I'll reap a bountiful crop. The ultimate reward is the same whether you are investing or gardening -- enjoying and taking pride in something you watched over and grew yourself.