I am constantly amazed at the vast array of opinions and approaches to investing. Seems like every year something ”new” is created that will change the investing world. Yet, after 2 huge down turns, rebounds and sideways markets – experience has proven nothing new can really ever exist. Investing will always be valuing a future stream of cash flows.
Inspired by Warren Buffet’s Crazy Farmer Analogy
Imagine for a second you own a farm and every year the farm produces enough for your family to eat, enough to sell for spending and even enough to store away for emergencies. You know the land and weather patterns well, so you remain confident in the ability to produce this for years to come. You are at peace because the farm takes care of your every need.
Now imagine you have a crazy neighbor who also farms, we shall call him Mr. Market. He comes to your fence every day and offers a price to buy your farm. Some days he yells out crazy low numbers and other days he yells out more intriguing prices. Finally he yells out a number that is so absurdly high, you could sell and buy 2 more farms somewhere else and produce even more food.
Investing is no different than this story. We own great companies at fair prices that produce cash flow or income for our current and future needs. We understand them well, we know they will be around for a long time and given enough time we will not only have all our needs met but may have a farmer offer us a crazy high price.
This is the beauty of investing and why I love my job. Everyday I get to listen to the farmer ( Mr. Market) at the fence yell out a price. I look at what our holdings actually produce for families and how it is meeting your specific needs. I then get to either ignore the crazy farmer (Mr. Market) or accept his offer. Every day I get to see us meeting the needs of our clients so they can live life ignoring Mr. Market and know there family is taken care of. We don’t need to wait 3-5 years to see the massive success of income or cash flow being generated that meets your needs today or will build and meet your needs for tomorrow.
Over the past 12 months we started to warn of the crazy farmer and prices he would be yelling out soon. When a decline finally does happen, Mr. Market will blame all sorts of things to justify his price. The weather will be bad tomorrow, disease will kill your cows, government is going to tax you more. But we know better because we know if a cow dies we have a calf taking his place, if the weather turns bad it will clear the next day and if government changes we have emergency reserves to buy more farms. As long as we can take care of our family with the harvest we ignore the noise from Mr. Market.
2017 has proven to be a fruitful year and we are pleased to see plans flourish. We expect the future harvest to build and no matter what happens we know your family needs and objectives remain secure. Planning was done well in advance to prepare for the many variables of the market and economy. Careful attention to detail has been placed on validating the necessary cash flow is available at the point in time you need it regardless of market ups and downs. Regardless of Mr. Market.
Evergreen Wealth Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.