Investment quality involves a combination of security and growth, of stability and volatility. It means being exposed to various parts of the economy so that a problem in one area doesn’t threaten your financial future, and so can participate when there is growth in another area. We don’t know the future. Diversification is the complement humility pays to uncertainty.
It’s that way in life as well. A balanced life combines work, family, recreation, study, spirituality, giving, and other areas. When you face problems in one sector, the other portions can compensate. Conversely, unexpectedly good news can lift your outlook on the rest of life. Again, we don’t know the future. Balance is key.
But how do you measure success? That depends on what you want. An investment portfolio isn’t successful if its return is so volatile that it gives you a heart-attack. In the same way, money and power aren’t the only ways to measure success. The key is having a plan. An investment policy helps you measure progress against financial goals; a life-plan will guide you towards your life-goals.
What makes for a good life? It depends on what you want. But whatever your plans may be, expect the unexpected!
Douglas R. Tengdin, CFA
Chief Investment Officer