MORE IS NOT ALWAYS BETTER

This week I came across the original contractor’s design for our yard layout. The landscape architect really took his job seriously as I counted over 300 bushes and trees in his plan. At the time I thought he did a pretty good job and as we were moving in couldn’t help but be pleased with our beautiful yard.
 
What the designer failed to mention was the high level of maintenance the yard would require. For example, we planted over 30 palm trees. I love palm trees and just assumed they would be low maintenance. In the first few years I learned those palms needed more maintenance than our other trees, and the darned things just kept getting taller. I must say I wasn’t too disappointed when a very cold winter killed several of them. In fact, the following spring we pulled out a dozen more just to lighten our load.
 
We also had over 40 beautiful red rose bushes. Their color really made the yard “pop,” but we quickly discovered that we weren’t the only ones who loved them. Thousands of aphids found those roses so attractive every year that we finally gave in and pulled them out.
 
As I walked around the house this week I noticed how dramatically the landscape had changed from our original design. Bad weather, pests, plants overgrowing their space, and a desire to reduce maintenance all led to a current yard that is much simpler than the one we began with. Yet we love it even more. It turns out, in landscaping, more is not always better.
 
I compare my yard experience with the process by which people seek to build and maintain an investment portfolio. Most begin with exotic plans but as time goes by they find the need to tailor those plans to the daily realities of life. They discover that investing is as much about lifestyle and peace of mind as it is about rate of return. Some investments wind up being just too much work or stress, so they seek to simplify. Often if you trim things back and thin others out, you wind up with a more manageable situation that is not only simpler, but often better than you started with.
 
Just as I believe investors should not take more risk than their situation requires of them, neither should they fill their portfolio with more individual investments than is necessary. Having too much not only leads to more work but it can also result in investment overlap which complicates risk management. Red roses may be beautiful but my yard today is plenty beautiful without them. Likewise, investors should not feel they are missing out if they don’t own all the current hot positions. Review your portfolio regularly and don’t hesitate to thin it down if it has become overgrown with positions that require more work but don’t really add any extra value. In investing, as with landscaping, more is not always better, and it can often be worse.