The Garden of the Future - What is your plan?
What Gardening and Your Wealth Have in Common An effective way to learn a complicated industry is to find parallels between it and other industries that you are already familiar with. In founding Pomona we made the distinct link between gardening and investing. Remember, Pomona was the Roman goddess of orchards.
The two may seem miles apart, but gardening and investing are driven by a lot of the same forces, and the things that trip people up in gardening are the same forces that derail investors. The behaviours needed for long-term success in both fields are simple but challenging for many. In gardening, it is good planning, correct planting, watering and pruning – not too much of it but regularly. In investing it is saving money, investing for the long term, keeping expenses low, and avoid debt. Neither field requires scientific research, however, incredible amounts of self-control and delayed gratification and these areas arewhere the challenges lie. Both disciplines have numerous fees that are mostly out of sight, out of mind. Gardening costs, a seed here, a bulb there, are always small amounts and does add up over time and the fruits of your work tend to be cheaper in financial terms and easier to get by at your local supermarket. Financial fees are mostly paid automatically and you never see an actual bill. In both cases, consumers can easily not notice how much they are paying, or whether they are getting a good deal. This makes both industries a breeding ground for inefficiency. In both gardening and investing, professional advisors can offer good advice that their clients choose to not adopt. The horticulturist advises the owner how to treat the soil, or when to prune the trees. The impact of not following the advice may not seem obvious at first and the owner agrees in principle, however, feels it can do without fertiliser or pruning can wait a while longer. In financial terms, young trees of profit could be impacted without this type of care. In both fields, one of the biggest challengesis not recommending the best plan; it is remaining on course with the plan — especially when it is at odds with psychological temptations that pull us in another direction. Things change and need to be adapted. In gardening, it is a pest that spreads and afflicts your precious plants; in investing, it is an industry or economy that changes direction and morphs into something people have never seen before by a setback. Even if you do everything right you will be occasionally rocked by a setback. In gardening, it could be a late frost. In investing it could be a bear market or a recession. Neither is a sign of poor decisions. It is an inevitable bump over a normal long-term path. In both investing and gardening, you can do everything right and still have a terrible long-term outcome due to luck or lack of it. Both are fields ruled by odds, not certainties. What can gardening teach us about investing? What matters is not making brilliant decisions, but making pretty good decisions for a long period of time. It is easier to discount simplicity in favour of complex solutions, but sometimes the simplest solutions are the most powerful.
In gardening, it is not finding a miracle plant; it is planning well and choosing plants that are suited best for the soil and climate conditions. In investing, it is not finding the secret formula; but saving regularly and buying into good companies for years or decades.