Beginning streaks of forest crimson, winked with orange and gold in a crystal dawn as early autumn's bite worked through my boots. I strode over a field of frosted grass in Fall's first mixture of morning stillness. The day's chilled beginning scolded summer wildflowers, purple aster, goldenrod and tiny dances of wild daisies, announcing that time for their end was near.
I often rise at 4:30 am and hike the woods from our farmhouse to the creek studio so I can write undisturbed. The dawn freshness is always wonderful but this morning was enriched by the first hints of autumn, the season I love most. This time of the year holds such a ripe blend of emotions, joy in the clear, crisp morning and blazing colors, gratitude for the rich harvest of garden vegetables and fruit laying plump, anticipation of a winter wonderland that will come and a little sadness because of summer's end.
I pondered this tinge of sadness as I strolled the tree tunnel that leads to our studio. This and the glory of this morning led me to think about a flaw in our business and financial thinking that leads to huge mistakes in our investing.
This flaw in the western lifestyles was first pointed out by my friend the Incan Yatchak, Taita Yatchak. He is a wise man and explained that most westerners fail to respect endings.
I'll go a step further and say we as a society abhor endings. This is a problem because without the ability to rid ourselves of the old, we end up carrying all types of extra baggage in our businesses and financial affairs, etc. We know freshness cannot grow amidst that which is the stale. Nature is in perfect balance. Endings fertilize the new. Yet we resist.
Imagine what would happen if I planted more and more vegetables in my garden without harvesting a crop.
Without respect for endings investors hold onto shares that have risen dramatically but really have no further potential. They come up with all types of excuses, don't want to pay capital gains, can't find anything else, maybe the company will take off again, etc.
Reality is-the potential is gone. The investment offered a great ride but the time has come to clear out. Period. Yet some hang on and on. This can lead to disaster. Value can fall. Fresh potential is kept out of circulation.
Businesses do this as well. Jack Welsh, head of GE points out that businesses have to continually reinvent themselves. He says “treat reality as it is, not as it was or as you want it to be. The ways we make money today will not be the best ways to make money tomorrow.
Good businessmen respect this fact and continually look for new opportunity and move on. Yet this is hard because of our Western expansionist indoctrination. Our linear thought process is based on never-ending expansion. We rape our forests, deplete our natural resources, pollute our air and water in a relentless quest. We have to have more. There is a price to pay.
Our current economy is seriously threatened by this phenomenon. After the oil crisis of the 80s, the day of the gas guzzler should have come to an end. Yet we barely slowed as economy cars gave way to SUVs and a penchant for large trucks that consume more gas than miles.
I am fully aware of this dangerous flaw in our national personality yet almost did not shift out of focusing my services entirely on international investments, offered through direct mail. The transition was difficult. I did not want to give up the good old times. I nearly had had a monopoly on this area of investing knowledge for two decades and had made a fortune. But as investors had become familiar with investing abroad, they needed deeper lessons on wealth. My customers had become more sophisticated. Plus competition had started to grow,
Remaining in this sector would have been a downhill road. I could have become better in this field, but would have risked becoming the biggest purvey in an ever diminishing market. How boring (like being the only buggy whip manufacturer)!
By expanding to inspired investing ideas, I opened an entirely new window of intellectual pursuit (that is interesting to me helps keep me alive) that adds entirely new dimensions, fields of friends and customers. In addition I created a new arena of opportunity and eliminated specific competition. Shifting from paper to the net reduced my two largest costs and dramatically helped the environment as I stopped using tons of paper.
Yet is was so hard to leave the old, comfortable ways.
The emotional difficulty of leaving Naples, Florida was immense. There were so many contacts, efficiencies, family and friends. So many excuses to remain. Yet this was now a large bustling city with noise, traffic and road rage. The features Merri and I had loved and needed from Naples, the peace and quiet of a sleepy fishing village had come to and end. I cannot imagine having made a better move, yet how I resisted.
Do you ever find yourself wrestling with this problem, in large or even many small ways? This is natural because the establishment has been blasting at us to struggle rather than enjoy this reality of the universe.
A radio advertisement I recently heard for a herbal formula called Pro Genesis, gives us a glimpse why we are this way. This formula purports to enhance the sex drive and the goes something like this. “When my sex drive began to diminish, I felt so ashamed, less than a man and felt I was a major disappointment to my wife”, yada-yada-yada. This type of message is pushed at us from the first moment we are able to read and listen. Be young, active and consuming. Never slow down, never accept that anything will end.
I am not suggesting that sexual pleasures need to diminish in maturity. But the laws of nature do dictate they will be different. I am reminded of the first car I ever bought and drove. This wonderful, powder blue, 58 Chevy was utterly dependable until, in my youthful exuberance, I went on a power craze. Huge new four barrel carburetor. Old engine. The piston rings didn't last a day.
Medical research has suggested that as we mature our brains become smaller (in terms of brain cells), but more sophisticated, complex, with vastly more connections. Our insights grow, our touch with nature increases, our ability to be in touch and truly know deeper wisdom expands.
Yet we are bombarded in every walk of our lives with the idea and concept that we should use this increasingly wonderful knowing instrument in youthful ways. We ignore the end of youth and attempt to live as we did when we were younger. This is equally true of 60 year olds trying to live a 20 year old lifestyle as it is of a teenager having the temper tantrum of a five year old.
We ignore ends, giving up the unbelievable grace and potential of the mid and advanced life. This is truth in our portfolio and life as well.
Look again, today, at your portfolio. Do any closets need cleaning?
Join me this glorious autumn at Merrily Farms and we'll talk about the profits in endings and much more. We only have one room left if you want to stay with us at the farm and I hope to see you here. Until then, good investing!