What do Investing and Wine Have In Common?
As the seasons change and the weather gets warmer, I’m reminded once again of some of my favorite outdoor activities. One of my favorite things to do when I was younger was grab a bottle of wine and take my wife on a picnic at the Princeton battlefield park. As I sit in my office today contemplating different ways to explain our approach to investing, I find that making wine and investing money have much in common.
Enjoying vintage wine is a fine experience. How often, though, do we consider the long journey from grape to glass? This journey requires so many steps and the slightest factor might be the difference between a mediocre wine and a great one. When it comes to investing, similar levels of care must be taken to achieve a successful outcome.
When making great wine, a host of variables must be considered. It isn’t only the grape that is used, it is the quality of the grape, soil, location, weather, irrigation, and timing of the harvest. Once the grapes are selected and picked they must be sorted, crushed and pressed, fermented, clarified, aged, and bottled. In any part of the process, if something is overlooked, the outcome will be less than optimal.
Investment management also requires attention to detail and there are several different factors affecting performance. These factors include how much is invested in stock, what type of stock, the quality of bonds owned, tax implications, and trading costs to name a few.
Just as winemakers don’t have any say over the weather, we have no control over the markets. Not every harvest will produce the perfect vintage and not every year will be a positive one for stocks, but expert professionals can still maximize their chances of success by putting their efforts into the things they have control over. I find this analogy timely because many of our clients have expressed concern over the current state of the financial markets. While we do not know when the next down market will occur, we have put time and effort into ensuring that the investments we recommend are optimized for our client’s personal financial situation.
Dealing with uncertainty and navigating the unknown are part of the job for both professions. The ultimate goal for both is to create the best experience possible. This is done by being mindful of conditions, but keeping focus on the things we have control over.