Investing Is Like Farming

Kennon-Green & Co. Fiduciary Financial Advisor, Wealth Management, Global Value Investing

Investing Is Like Farming

This Halloween evening, I am sitting at one of the desks in my home, drinking a cup of Costco coffee, and penning content for the Investing for Beginners site.  I’m going to try and pre-write the next few months’ worth of articles and set them to automatically publish themselves due to the upcoming time crunch we’ll be facing at the Kennon & Green family of businesses, as well as in my personal life.

As I wrote a blog over at Investing for Beginners, I typed out a line and did a double take.  The gist of it is this:

Every penny you spend is not a penny lost.  It’s more than that.  You also lose all of the pennies, nickels, dimes, quarters, and dollars that the penny could have produced if invested long enough and allowed to compound.  Then, you lose the pennies, nickels, dimes, quarters, and dollars that those pennies, nickels, dimes, quarters, and dollars those would have produced.  

This basic truth is the foundation of a successful family farm.  It’s amazing how much the average farmer knows compared to the average investor.  The average farmer would never slaughter his prize bull for steak.  He’d breed it to produce more prize bulls.  The average farmer would never sell his necessary seed before planting it.  He puts in it the ground, tends to it, waits for the harvest, and then lives off the surplus.  Money works exactly the same way.  

In fact, in the backend of the blog, I have an essay I’m working on that draws parallels between farmers and investors.  There is a tremendous amount in common.  The same temperament that grows corn and soybeans successfully is the same temperament required for long-term compounding to work its magic; just a different application.

Image from WikiMedia and Released for Use for Any Purpose with Attribution to David Ball