Monthly Archives: January 2016

Fold, Again

martha stewartMarie Kondo made the bestseller lists again with her recent tome, Spark Joy, a companion piece to her other hit, The Life Changing Magic of Tidying Up. While her first book was an ode to de-cluttering and the fine art of folding, Spark Joy focuses on the intrinsic pleasure, nay, joy, our stuff gives us. She recommends sifting through our closets, cradling each item— salt-stained leather boots, umpteenth black cocktail dress, or lumpy handbag—and asking ourselves: Does this boot/dress/bag still give me joy? If the answer is negative, then we should thank them for their services and give them the boot.

That Kondo has become a publishing superstar tells you she’s tapped into our desire for a less encumbered life. Cleaning out our closets is the first step in getting above the smog-line. Before the holidays I tackled the kitchen cabinets, tossing out old packages of noodles, cans of expired mung beans and editing my burgeoning tea collection, especially those jumbo bags of roiboos that I will never drink.  For the next few days whenever I went into the kitchen I opened the cupboards and felt, yes, joy, at the order I had created.

Hoarding and de-cluttering are the push/pull of our lives. We want to travel lightly but not so lightly that we give up creature comforts. I tossed out a kilo of roiboos but I still travel with my own kettle because I like a proper cup of tea. And I hoard moisturizers and hair styling products like they’re potatoes in a famine reasoning that when Armageddon comes, I’ll greet it with soft skin and frizz-free hair.

Fear is what drives our hoarding behavior. It’s an evolutionary advantage to put aside a little extra for lean times. But the key with anything is to keep things in circulation, not to hoard. We don’t sit all-day to conserve energy. It only grows when we spend it on daily chores and moderate exercise. We don’t feel more love by withholding it, only by giving it. Likewise, we don’t get wealthy by not investing it.

Today, Canadians are holding a record $75 billion dollars in cash accounts. This massive hoarding of cash is in response to the economic shocks of 2008 and, more recently, the rout in global, and especially, Canadian equities. Essentially, the average Canadian has folded in on herself like one of Kondo’s de-cluttering demonstrations. She’s shrunk her investment footprint down to a teensy-tiny size.

Great for closet space in tiny condos, lousy for future returns.

No one enjoys being whipsawed by the markets but by capitulating Canadians are sure to miss out on the inevitable market recovery. As asset prices recover people will start to get excited about investing again. If the past is any predictor of investor behavior, only as prices froth will people feel confident enough to join the party. At this point they will over-pay, lower the potential for gains, and reduce their margin of safety on those investments. Hey-ho.

So, these days, as you contemplate de-cluttering your life of pain-points and you look at your portfolio and mentally hold each ETF, equity or bond, ask yourself whether it still gives you joy. But don’t be too hasty to toss it if the answer is, “No joy. Whatsoever.”

Discarding over-worked winter boots is one thing, forfeiting future returns is quite another.

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