Every morning, I have the habit of getting up early and heading to the local Starbucks for that first cup of coffee. Regardless of the weather, it is fun, at least for me, to start the day in that quiet moment before the sun rises and all the commuters hit the road. Starting the day in the peace and quiet of morning gives me balance, which is important mentally, spiritually, and physically. Many of the different alternative approaches to traditional medicine have the goal of acheiving balance. This is true not only for our being, but also for our activies, work, play, and our investments.
This morning was cool and windy and a crowd of Canadian geese flew over heading south for the winter. It made me think about the things we see everyday around us and how they might apply to investing.
There are several characteristics of the natural world that are very relevant to investors. The markets operate on the same planet as everything else, so it is logical that the natural laws that govern Earth apply to investing. Natural investing is simply applying the rules of nature to learning from nature and applying it to how we invest our money. Like alternative medicine, the goal is to find the balance between our desire for growth and our need for safety.
In nature, there are four major seasons; Spring, Summer, Fall, and Winter. These four seasons all occur at different times, and for differing lengths of time across the planet. The Fall Equinox marks the transition from Summer to Fall and it occurred in the United States on September 22 at 5:18pm. As you may know, for all of those places below the equator, fall actually began six months earlier on March 20, 2009. There are different markets, as well, and their cycles also begin and end at different times. Some of these changes are predictable, others completely unpredictabe! As the seasons change, plants and animals make adjustments to prepare for the new season.
As fall begins, the birds begin their migration to the warmer climates of the south. Bears begin to eat heavier meals and build the fat that they will need to survive when they hibernate during the Winter season. Squirrels continue building their supply of acorns and nuts. Nature is full of examples of the instinctive behaviors that allow life to flourish and survive regardless of the dramatic changes of our seasons.
Unlike the markets, the seasons of nature are regular and predictable. Whether it is the stock market, bond market, commodities or futures markets, investors do not have the regular changes of seasons that our friends in the animal kingdom enjoy. The market has no equivalent to lunar cycles or regularly occuring seasons so maintaining a balance is the only way to be prepared for any season. We may know the season we are in currently, but we do not necessarily know what season will follow and we certainly don’t know the exact time that it will arrive.
When you periodically review the investments in your portfolio, think about the four seasons. Do you have investments that will survive the cold of Winter and others that will explode with growth when Spring arrives. Do you also have investments that will survive the heat of Summer and provide a bounteous harvest in the Fall?
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