Investment Boredom

Are your investments boring?

Photo: Rachel Calamusa. Source: Wikipedia

Investing is often portrayed as exciting: the flashing monitors, microsecond algorithms, people at exchanges shouting at each other and running around. That’s what attracts a lot of people to this business: the adrenaline rush of a winning trade, or the gut-wrenching dread of a plunging market.

But the best investments are often boring affairs. Philip Morris made billions for its investors by successfully manufacturing and marketing cigarettes; Wal-Mart used sophisticated supply-chain management to lower prices to rock-bottom levels; Ray Croc pioneered franchised fast food at McDonalds. These innovations were ground-breaking, but there wasn’t a lot of romance to their ideas. Assembly lines and franchise agreements aren’t typically the stuff of best-seller novels.

Photo: Octavio Lopez. Source: Morguefile

Even so, these companies created hundreds of billions of dollars for investors over several decades. They had to overcome a lot of skepticism along the way, but by satisfying their customers over and over again the companies built brands that thrived through wars and depressions and inflation and financial panic. This value didn’t arrive overnight, though. It took years of engineering trials (and errors), human resource management, and patient, steady leadership.

Investing is like gardening: there’s a time for planning, a time for planting, and a time for harvesting gains. The growth itself may be imperceptible. But a good strategy will let you sleep at night, and will be more productive that you might imagine—if you let it work.

Douglas R. Tengdin, CFA

Chief Investment Officer

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