Investing, planting your tree to fruition
A light and easy read
This might sound ridiculously crazy, but every morning when I wake up, I’d go outside and greet the sun and the plants outside my house. I love looking at the lush greeneries that's always there existing gracefully.
I would say good morning and feel content as I look forward to living another day.
Luckily I am not too crazy because in Yoga, there's a set of movements called Surya Namaskar (salutes to the sun).
I am digressing.
Out of respect and sheer gratefulness for the plants around my house, I decide to write this article.
If you take a random example of a mango tree (mango tree is common in a tropical region like Indonesia), it is amazing to see it's humble origins. It literally came from a small helpless seed.
And to think that it can become a huge tree like below, is mind boggling, then to enjoy the sweet deliciousness of a mango fruit, is bliss.
To me, observing this alone is encouraging because planting a tree and seeing it grow is very easy to understand. I’d argue even toddlers could see how transformative plants are and the essence of time and patience it requires to wait for a tree to grow fully.
Plus, it has direct parallels to the spirit and concept of investing for the long term.
So if you want to start investing, there’s no need to rush to think about:
Price to earnings, enteprise value to ebitda or other ratios
Good corporate governance of the company
Product and innovation of the company
and the list goes on that you need to consider
When you start investing, it might be useful to think about planting a tree to fruition first. Then go on to the technical stuff. I am arguing that when we are in the weeds of the numbers, figures, opinions, sentiments yada yada, we can end up forgetting about the essence of investing.
Planting a tree to fruition is like investing for the long term
1. The start is always unassuming but exciting.
Planting a big tree starts with a seed. Or if you plant a mango tree, marcotting is another option. It does not cost much to buy the seed from a store or get that seed from a sweet mango fruit you just ate.
Also, that seed is completely helpless. It could be blown away by the wind in an instant. Yet you are excited in putting the seed inside a bucket of water for the whole evening. You then transfer that seed into a pot of fertile soil.
And you wait eagerly.
You are already thinking about how this little seed would grow into a big tree with delicious fruits on day 1.
If this rings a bell when you are investing a small sum of money into a company, then well done. When you start investing, it is usually a small amount of money and you’d hope that it will grow to be a giant sum in the future.
2. The progress is usually treacherous.
Now comes the fun part. After regularly adding compost to your fragile shoot, you are seeing signs that it is growing. It is a truly magical moment. Each day you water the plant, you see progress, inch by inch.
As it takes shape and becomes more attractive, it starts to attract other creatures. Ants, mealybugs and other pesky things that can seriously jeopardise your mango tree. At this juncture, you are watchful to ensure that your plant is safe from all these pesky creatures. But you are well aware that your plant can catch a lethal disease and wilt permanently.
When you are in the midst of investing a company, it is only inevitable that company’s growth plans might be undermined by a number of unforeseen factors. You are always on the look out for those and ensure that the company that you invest in remains on track.
But inevitably also, you will feel:
worried
uneasy
helpless
because these factors are usually outside of your control and there are never guarantees. This is usually the most difficult part in investing. Most will succumb and abandon their investments entirely when the going gets difficult.
3. But the fruit is sweet when ripe.
After constantly monitoring your plants’ growth, it looks like it is now a much more sizeable tree that bears fruits. Your 5 years worth of investments are now ready for harvest. What an awesome feeling.
When you look back into your journey of planting that tree from seed to fruition, it has been a roller coaster. But with a bit (or a lot) of luck and dedication, you deserve to enjoy that sweet tasting mango fruit.
Finally, when we are ready to harvest our investments, we will remember the roller coaster (price fluctuation) journey of monitoring your investments day in day out. There are definitely setbacks, but with the right mindset and hard work, our efforts usually would payoff nicely.
And of course, we are super glad that we don’t abandon our tree when it got swarmed by pests. We stick to it and figure out the best way forward.
Closing Remarks
Appreciation to you for reading this light article thus far. I hope you see the simplicity yet magical analogy of investing for the long term by thinking about planting a tree to fruition.
Btw, if you don’t want to plant the tree yourself because you are a cool consultant, you can always get a gardener. A good gardener would want to get paid by sharing the yields of the tree. So that the gardener always has the best interest to look out for your tree. If you know, you know.