FEATURE — I traveled home last week from a business conference in South Carolina. Shortly before heading to the airport, I received notification that my flight had been canceled due to a winter storm in Denver, Colorado.
From my experiences as a pilot, I generally don’t book through Denver in the wintertime, but in mid-March, during a fairly warm spring, I assumed I would be just fine. (There has to be an investing analogy in there somewhere).
Ultimately, the only way the airline could get me home in a reasonable fashion was to send me to Las Vegas where I would need to pick up a shuttle back to St. George. It wasn’t that bad of an option as we have an excellent shuttle service and the driver and I had some great conversations on the way home.
The first half of the drive was uneventful but then some of the winds from the stormy weather patterns that day decided to settle along our route. It isn’t unusual to get high winds in the desert but these were uncomfortably strong. As the driver professionally handled his duties, the occasional gusts took my mind back to a time when I lived on the desert outskirts of Las Vegas.
I was only 25 at the time and was in the process of building a very large block wall around my first home. I wasn’t skilled in masonry but funds were tight so I did what I usually did in those days. I asked a lot of questions and tackled the project myself.
I was building the wall in 20-foot sections, each one being 6 feet high. Every 4 feet I had installed rebar in the footings so I could pour concrete down the holes in the cinder blocks, tying the wall to its foundation. I had been advised to fill these cores as each section of wall was completed.
When I finished the first 20-foot section I stood back and admired my work. It was very proud of the accomplishment, it being as straight and level as any I had ever seen. I couldn’t wait to get started on section number two, but only after I filled the cores with concrete.
The next day when I approached the project the idea of mixing and hefting all that concrete did not entice me, so I chose to start on laying the next section instead. After all, putting down new blocks brought great fulfillment while pouring concrete in the cores added nothing to the appearance of my beautiful wall.
Over the next six months, I managed to finish eight more sections of wall, giving me nearly 180 feet of privacy around my backyard. With each new section I beamed with pride in my hard work. The boring task of pouring the cores had disappeared somewhere into a distant memory. All that invisible work could wait because I was getting very excited to see the finished project. I only had three sections left to go.
The next morning at about 4 a.m. I was awakened by one of those fierce Las Vegas windstorms. It was pretty similar to the one I rode home in last week. As gust after gust pummeled our house I marveled at the strength of Mother Nature, while not giving much thought to it other than that it was keeping me awake. Then it happened. After one huge gust, I heard a very loud thud, as it might sound if a huge boulder fell from the sky.
I jumped up to look out my window and saw my 180-foot block wall lying flat on the ground. The only blocks left standing were a few that had been set on the rebar where the cores were supposed to have been poured; as if to mock me. I remember staring in disbelief as six months of hard and hot labor lay crumbled on the ground.
I have learned some painful lessons in life. That one stands out as one of the most memorable. Six months later I had rebuilt the wall, faithfully pouring the cores as I went.
A good portfolio, like a block wall, needs a core to provide stability in times of storm. Core investments are long-term, sometimes slow-moving positions that often pay dividends. They are not sexy and rarely make the “pick of the day” in those monthly newsletters, but they play a critical role in long-term financial planning.
They are not the most fun to buy and certainly not very exciting to own but plodding along in the background, the core is designed to provide consistency and stability that helps to protect you when market winds blow. You may not always notice them, but when it gets stormy they will be very much appreciated.
Market storms can hit at any time. They can arrive with world events that warn you in advance, or they may strike on the calmest day. When those fierce market winds blow, those who patiently hold a proper core of solid, and sometimes boring investments, are more likely to wake up the next day and find their financial walls still standing.
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