ONE BAD APPLE

​I once served on a board that was tasked with helping to grow a business. The members each had special talents they brought to the table and together we hoped we could share our strengths and find success.  As time went on it was interesting seeing the different perspectives of each individual and how they worked together, even though not always agreeing, to accomplish the same goal.
 
It was apparent early on that there was one individual in the group who, despite his qualifications for the position, seemed to struggle to work with the other team members. He was what some might call a real downer. He reminded me of the lonely donkey, Eeyore, in the “Winnie the Pooh” series. When he walked into a meeting, it was as if a little rain cloud followed him and filled the room. 
 
One day this individual announced to the group that due to some life changes, he would no longer be able to serve on the board. In the weeks that followed his departure, the atmosphere in the group changed dramatically and the business we had been building began to flourish in new and exciting ways. It was like that moment after several days of rain when the sun finally peaks through and you had forgotten how beautiful it was.
 
I have often pondered the negative effect this single individual had on the entire organization. I learned from this experience that one bad apple truly can spoil the whole bunch.
 
It is normal in every investment portfolio for there to be winners and losers. Often this is the natural result of economic cycles. But sometimes there are investments that are truly bad apples. These things don’t just go down, but they go down a lot and they keep going down. If these “bad apple” investments are allowed to persist they can pull down an otherwise solid portfolio. This might be a poor investment that you own but one you cannot let go of because of some emotional attachment. It may be some get rich quick scheme your crazy uncle or next-door neighbor introduced you to. Or it may just be that “fun money” account you set aside for day-trading that does nothing but lose money.
 
Whatever the reason, and no matter how you feel about it emotionally, if you have a bad apple investment in your life, get rid of it. It just isn’t worth the cost. I have learned from looking at many portfolios that a single bad investment can pull down an otherwise well-designed retirement account.
 
It is hard to admit when we make mistakes. It is sometimes difficult to cut things loose in our lives that we are attached to. But no one needs little dark rain clouds in their lives and certainly not in their investment portfolios. And you may just find a little extra sun shining on your portfolio.