Do you plant Strawberries or Cherries?

I always urge fellow investors to focus on the  long-term by practicing patience. The challenge to adopting patience is human nature. We want quick results and are loss-averse. When investors see a small gain, they sell out to avoid feeling bad if they lose later. 

One way to prevent this self-limiting behavior is this: If we could go back to a mental image of the benefits of patience every time the urge to sell early comes, our chances of staying invested will go up. I recently came across such an image that I would like to share with you. 

I recently went fruit plucking with the daughter. We started with strawberries, and finished our day picking cherries. As we were driving back, this image of a strawberry bush and a cherry tree side by side flashed into my mind. Chatting with the growers, I had seen a clear contrast between the two farmers’ workload and results. 

The strawberry farmer has to work hard and still received low returns. Why ? Because a strawberry bush yields only 500 grams of fruit every year, and it has to be replanted after a couple of years, as the fruit production goes down rapidly.

The farmer has to work long hours all year just to maintain a medium-sized farm. 

The cherry farmer on the other hand had a good life. He worked much lesser and received plentiful results every year. Why ? A cherry tree takes 3-5 years to fruit. One tree produces about 50 kilograms of cherries per year. The trees last 16-20 years. And certain species, like black cherry,  example, can live up to 250 years.

The farmer has to work hard only until the tree is ready to fruit. After that, minimal maintenance is required, and the fruit arrives year after year after year. 

See the similarity to investing styles ? The short-term investor is like the strawberry farmer, working hard year after year and still getting low returns, even if the produce turns out good. The cherry farmer is like the long-term investor, who worked hard in the beginning and then let the tree do its thing, continuing to enjoy results for a long time. In reality, our long-term investor gets even better results than our cherry farmer - imagine the cherry tree producing increasing fruit year after year ! 

Keep this image in your mind, and give compounding time to work for you