Photo: Wendy. Source: Flikr. CC-BY-2.0
One of my least favorite jobs every year is raking leaves. It’s cold, lonely work. If I use gloves, I have a hard time picking debris out of the tines of the rake when they get stuck – which they always do around the garden and shrubbery beds, getting caught with the old plants and weeds. I used to be annoyed at my swollen hands, afterward. Now I wonder if the raking motion will throw my back out. I can’t know that for a day or so.
And finding the right time to work in the yard is important. It’s no good raking in October, before most of the leaves have fallen. But November is so wet and blustery, either the leaves are too sodden to rake up easily, or they just blow out of the piles I pull them into. It used to be that I could at l least enjoy watching the kids jump into the freshly-raked piles, but now we’re supposed to worry about e coli, mold, and ticks. And the kids are too big now, anyway.
But raking is important. It keeps the grass from getting smothered. And some of the leaves in my yard are really, really durable, like those from beech trees. They never seem to break down. When you pick up fallen beech leaves, they feel like they’re made out of plastic, not crumbly leafy stuff. Web sites that tell you to ignore the leaves and let them decay over the winter aren’t written from around here.
Raking up leaves is part of getting ready for winter, like stacking wood or putting snow tires on the car. We haven’t had any big storms yet, but we will. And when the white stuff starts falling and the roads get slippery, we’ll want to be ready.
Public Domain. Source: Max Pixel
It’s the same with investments. If the market has been moving in one direction for a while, things can get out of whack. An extended bull or bear market tilts your portfolio away from where you originally decided. It’s simple to rebalance, but it isn’t easy. It may involve paying capital gains taxes or selecting stocks and bonds to sell. And selling is hard. Stocks that have gone up a lot in a portfolio can seem like old friends, even though we know otherwise.
But like cleaning up outside, rebalancing a portfolio prepares us for unexpected weather. We don’t know the future, and we can’t know – although we have forecasts – what the various markets will do. We need to think strategically about our finances: our need for cash, returns, income, our ability to handle fluctuations, and other limitations. Our asset allocation should fit our own personal situation. Rebalancing isn’t exciting, but it’s like taking care of the yard: it doesn’t happen by itself.
Raking up is one of those chores that just needs to get done. And if it hurts my back, maybe it’s time to get a leaf-blower.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”