Photo: Igor Oskyonnov. Source: Fancycrave. CC0.
The breadth of offerings boggles the mind. There’s dozens of types of candy, beef jerky, chips, and cigarettes, coffee, milk, sports drinks, sodas. Often there’s a small hot area where you can buy pizza slices or hamburgers or hot dogs. The diversity of product is a way for the owner to entice us out of our routine and into a purchase. Surely there’s something there we crave: sweets, salt, caffeine, tobacco. The profit margins may be small, but they make it up in volume.
Diversification is how we survive, whether it’s having different ways of thinking about a problem or wearing different clothes or preferring different types of entertainment. One person loves sports, the other reads fiction, still another watches TV. Diversity strengthens our interactions, and provides a safety net when things go wrong.
Consider the opposite: a monoculture is what led to the Irish Potato Famine. The potato blight that spread in the mid-19th century was a worldwide phenomenon and devastated crops everywhere. But it didn’t cause famine in Poland or Sweden or Peru. Only in Ireland, where tenant farms were so small that only potatoes, and really just one kind of potato, could provide enough calories to feed a family. When the blight infected the Irish potato fields, it easily spread across the country and resulted in millions of deaths. The resulting mass emigration changed history on both sides of the Atlantic.
Potato monoculture. Photo: Justin Russell. Source: Wikimedia
The advantages of diversity are too-often overridden by our intrinsic desire to be with people who are just like us. Unfamiliar patterns, behaviors, and cultures can make us feel uncomfortable. We have to get past our discomfort and learn new ways of thinking. The resulting mental gymnastics can be like yoga positions – uncomfortable at first, but eventually they bring all kinds of physical, mental, and emotional benefits.
In our investments and in our lives, diversity makes us stronger. Ecologically, diversity is what allows populations to adapt to changes in the environment. Whether we’re assembling a team in the workplace or putting together a portfolio, it’s what we don’t know that’s the most challenging. Diversity allows us to expect the unexpected.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”