Recently, Stacey and I had a chance to visit Tanzania. Truly, the trip of a lifetime. One of the adventures gave me perspective on financial planning and investing.
I learned a traditional way to make coffee. We took a coffee bean from the plant all the way to the pot and then poured a cup of delicious Tanzanian coffee. It takes months for the beans to grow. After they are ripe, we have to peel not one, but two hard shells. To remove the shells, we pound the beans with a mortar and pestle.
In traditional Chagga culture, working hard is made easier by singing a song. While our leader was pounding, she sang “Twanga! Twanga! Twanga!” The rest of us would join in a chorus and yell “Twanga!” She would mix up the words and say funny things, like making fun of another tribe, the Maasai. Laughter, and many hands, make light work.
We pounded our way through the shells and roasted the beans in a pot over a campfire. Then we ground the roasted beans into coffee grinds and poured them into a coffee pot, over the fire. The coffee was delicious! I never appreciated how much work went into a cup of coffee until I spent some time making it myself—all the way from the plant to the pot.
Investments, for our clients, is less work than making coffee. In fact, it is more akin to pushing a button on an automatic machine and enjoying the tasty brew. The less work you do with your investments, the more you enjoy them. The more often we look, the more likely we are to see short-term declines.
On the other hand, if you are feeling stressed, it might be worth looking just so that you can see and appreciate the hard work behind the scenes.
At A&I, we work hard to understand the decisions made by the mutual fund managers we invest with. We want to make sure they are consistent. We need them to provide us confidence that they will continue to succeed. So far this year, it has been a year of “Twanga! Twanga! Twanga”: a lot of hard work! The S&P 500 is driven by a small number of companies that are, according to one of our managers, Nuance, either “over-earning or over-priced.” It would be a mistake to conflate an investment’s short-term comparable results with it’s long-term success. Instead, we work a little harder.
Successful investing requires humility, diversification and patience. If you would like to learn more about our investment process, contact us at any time. You might (also) want to click here to read the most recent Nuance commentary.