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Growing Carrots

Summer Garden Bounty

I just completed a week hosting an Investment Camp at Granby Public Library. It was a blast and the kids were terrific. This time around was a little easier than my first Investment Camp - where the ages ranged from 8 to 16 years. Kids grow so fast and there is an amazing spread in the interest and skill levels between the different age groups. One question I asked this year’s crop of 7 to 11 year olds was at what point does a child turn from being a lot of work to a real help around the house. This brought a lively discussion that focused on the theme of starting a summer garden. It takes planning, watering, weeding, and good old-fashioned hard work.

Signal From Noise

Planting a summer garden also requires a dose of faith (that your seeds will grow) and a large amount of patience. Again, this has huge parallels to the art of child rearing. It is easy to get bogged down in the “weeds” of sleepless nights and bodily fluids while forgetting just how amazingly fast their bodies develop into functional beings (it is probably a good thing they are cute at 2 AM). The perspective of a farmer or a parent can also be very helpful when we examine the ebbs and floods of the financial markets. It is very tempting to get caught up in the daily banter of talking heads warning us about the crisis du jour. The challenge for many investors is seeing beyond the next quarterly earnings announcement and thinking in terms of a complete market cycle. If we are really intelligent (The Intelligent Investor), our horizon should ideally extend to the end of our expected lifetime - or in perpetuity - to support a family legacy. This famous Morningstar chart shows that a newly born “investor” would have had to wait until they were old enough to drive to generate any capital appreciation on their way to the magical returns that came from staying the course over several decades.

Enjoy The Bounty

The trouble with growing carrots is that their stems look so much like the weeds all around them. Their care and development takes a trained eye, consistent care, and a huge amount of patience. One example I always use when speaking to kids groups is the idea of the “magic” penny that doubles every day for 30 days. I give them a choice of receiving a $1,000,000 bill today or the penny. The student who chooses the bill feels pretty smug about their choice right up until the value of the penny rockets upward during the last few days of the month. Physicist Albert Einstein once described compound interest as the eighth wonder of the world. It is just like that with kids and carrots. Enjoy the bounty!

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