Years ago, when I was still early in my career, a seasoned financial planner showed me a photo of a beautiful garden in bloom and asked what it had to do with an investment portfolio.
For folks who are avid gardeners, this will sound obvious. But for someone who is a novice gardener and, at the time, did not yet own a home, her question was “a lightbulb moment” for me. Different types of flowers bloom in different seasons. No flower is going to bloom the entirety of the year, at least not in East Tennessee. Thus, someone who wants flowers blooming year-round needs to plant a wide variety with different blooming cycles. The result is a garden that is always in bloom, but with different highlights depending on the time of year.
What does this have to do with an investment portfolio? Just as irises don’t bloom in the fall and asters won’t thrive in the spring, a healthy portfolio with diverse investments is likely to have positions that are “in bloom” while others are dormant—but that doesn’t mean either is of low quality. One may spring to life at a time when another starts to wilt, but it will come back in turn.
If one plants only tulips, the garden will be magnificent in April, but quite dull in July. But with the right mix and balance, a garden (or investment portfolio) can grow and flourish while becoming more beautiful over time, ebbing and flowing as it matures.
Pruning is also important—we want to make sure one plant isn’t getting so large that it chokes out another that has an equally important role. And if a plant simply isn’t producing year after year, it may need to be pulled out altogether, through no fault of the gardener. The same is also true for a healthy investment portfolio.
We could take this illustration still further by discussing the appropriate climate. Your portfolio likely needs to look different from someone else’s if they are in a completely different stage of life. Likewise, it would be silly to compare your garden in East Tennessee to someone’s in Costa Rica. They’re in completely different environments, so of course the plants that are perfect for their garden will be very different from those well-suited to yours.
Just as with a thriving garden, unexpected droughts or storms come to a healthy portfolio as well. Some things are simply out of our control. But with appropriate planning and a healthy perspective, moments of unpleasant surprise don’t have to cause panic. They can simply trigger the reminder that portfolios go through cycles and storms, just like gardens. If we plant according to a plan and are patient and diligent, we will reap a harvest.
At PYA Waltman Capital, our purpose is to help our clients build a financial plan (much like a garden) that is thoughtful and allows for peace of mind and perspective through all of life’s seasons.
The opinions expressed are those of PYA Waltman Capital. This material is for informational purposes only and should not be taken as investment advice.
PYA Waltman is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about PYA Waltman's investment advisory services can be found in its Form ADV Part 2 and/or Form CRS, which is available upon request. PYA-26-22