What To Do With That Rock?

Guest post by: Burt White, Chief Investment Officer, LPL Financial

Burt White

As a kid, there was nothing that I liked more than going to my grandparents’ farm in West Virginia. The animals and acres of open land offered many opportunities for a youngster to have some serious fun and, from time to time, find a bit of trouble to get into. However, I never understood springtime on the farm. Every other house along the four-hour drive from my home to the farm looked so green and adorned with flowers, while my grandparents’ farm in the spring consisted of acres of dirt as far as the eye could see. It certainly didn’t look like spring.

My grandfather would always remind me that on a farm there are three distinct milestones on the farmer’s calendar: the time to plant, the time to grow, and the time to harvest. Sure enough, underneath that springtime dirt were the seeds of future growth. By the summer, when other yards were brown under the scorching sun, the farm was alive with the growth of those springtime plantings that continued well into the fall harvest.

I believe the same can be said for investments. There is indeed a “planting” season when it comes to investment opportunities. The harsh winters on a farm serve as a means to refresh the acres of dirt tired from a season of growth to get ready for the spring plantings, which is similar to how tough economic environments, stock price declines, and recessionary periods cultivate the investment landscape for the next potentially great investment “harvest.”
 
There has certainly been much to be concerned about over the last few months, which could be the “winter” that opportunistic investors have been waiting for. While the childish bickering in Washington, the concerns over the debts of many nations in the developed world, and Europe’s seeming inability to unify to find solutions to their economic challenges are presenting a significant headwind to economic prosperity, what typically comes out of challenges are opportunities.



What are you going to do with that rock?

 
My grandfather used to always remind me that one of biggest enemies of any farmer are rocks — they can damage the plow and reduce the effectiveness of the land. During the spring, when most kids were on an Easter egg hunt in colorful flower beds and green yards, I would have a different game that I would play with my grandfather in those dirt fields. Instead of eggs, we would go on a search for rocks.
 
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