Remember the fable about a ham and eggs breakfast?
In this tale about commitment, the chicken produces the eggs for the meal, a relatively easy task that she can repeat over and over, while the pig is required to sacrifice his life to provide the ham. I’d say that the chicken is somewhat invested in the venture while the pig is totally invested.
There are chickens and pigs investors, too.
A chicken investor dabbles in the stock market — buying and selling infrequently. They may enjoy investing, spend some time researching the markets, but probably don’t want to spend their whole life in pursuit of the next best stock. They may buy a couple of solid stable equities and stay with them as long they are doing their job. Dividend stocks are popular with chicken investors. Chicken investors are apt to have a well rounded and diversified portfolio that includes bonds.
Pigs, on the other hand, enter the financial markets with zeal, spending lots of time reading and researching the stock market. They may buy and sell stocks frequently, always experimenting with the next best new idea. They often know their numbers and are willing to take risks. Their adrenalin begins to flow at the beginning of each day’s market open and weekends with no open stock market can be drudgery. Opportunities for abundance — and the loss of abundance — can abound in a pig’s world. It’s the deal that brings them joy and they are willing to sacrifice other things to get this thrill.
And, of course, there are lots of part chickens/part pigs investors. I am one of these hybrid investors. Hybrid investors have characteristics of both chickens and pigs at all sorts of levels.
Chickens often seek professional advice and probably should. Without the time or interest in continuous research, it’s a good idea to work with someone who’s also invested in your success.
Pigs often go it alone going against popular trends and popular advice. If this works, and it certainly can, then go for it. But being a pig can become as time consuming as a full time job, so enter that realm with caution.
So why is any of this important?
I think that part of being a wise investor is knowing what type of investor you are. What type of risk are you comfortable with? How safe do you want your investments to be? What kinds of equity or bonds or funds are you most comfortable with? What are you most afraid of? What kind of decision-maker are you? How much control do you want to have over investment decisions? How involved do you want to be in your investment decisions?
I think we should ask ourselves these questions. I’ll discuss these questions and others in a later blog series. For now, just think about this a bit and see where you think you settle in on the chicken-to-pig spectrum.