Photo: Ellywa. Source: Wikimedia
New England beaches have a lot of sand dunes, often covered with beach grass. The plants grow in lines, supported by underground runners that link them to each another. Over time, the grass thickens and the dunes stabilize. This helps prevent erosion.
In Europe, people used to use beach grass for fuel, thatch for their roofs, and for animal feed, until they realized that using the up the grass caused the shoreline to shift. Some villages and estates in Holland were buried by blowing sands before governments prohibited pulling or harvesting the plants. Now, local governments want to save a tourist attraction more than are with protecting farmland.
Sand dunes. Photo: David Adam Kess. Source: Wikimedia
Beach grass is adapted to harsh shoreline conditions: wind, salt water, and periodic coastal storms. It has to cope with a dry, windy environment, where moisture and nutrients are in short supply. As a result, beach grass doesn’t have a lot of competition and it’s the dominant species on many barrier islands and shoals on the Atlantic and Gulf Coasts. The dunes and barriers disperse the ocean’s energy, and allow a much richer ecosystem to flourish behind them in marshes, lagoons, and estuaries.
Some of our investments are like beach grass. They’re not the highest yielding or fastest growing instruments, but they provide stability during stormy times. They keep us from being blown around by the shifting winds of opinion, and they allow us to assemble a diverse ecosystem of other investments – investments that may require more analysis or a more forgiving economic environment.
Dunes on Cape Cod. Public Domain. Source: Wikimedia
Circumstances change in ways we can’t predict, and there are situations where what we really need is something secure. Other times, we want a growing income stream or something can provides growth down the line. Economic conditions are like the weather: there are stormy times followed by periods of fair weather followed by variable conditions. We need to be prepared for all kinds of environments.
Our portfolios are a lot like an ecosystem. Diversity makes them stronger.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”