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Island Investing

Riffs, rants, and the upside of investing from way off Wall Street


The Da Vinci Code Portfolio

One of the advantages of working in the sweltering heat around Washington, D.C., when I was a bit younger was being surrounded by some truly impressive architecture. It’s everywhere – or at least it’s in enough places that you’ll at some point find yourself Googling things like “neo-palladian.” And you don’t need Tom Hanks with that bad haircut to tell you that the symbols built right into our capital’s buildings are amazing.

Walk around D.C. long enough and you’ll realize that many of those architectural symbols are repeated, and that one of the most frequently used is the fasces. In the literal sense, a fasces is a bundle of sticks bound together with an ax blade emerging from the center. In Roman symbology, however, a fasces stands for “strength through unity.” It’s also the root word in ‘fascism,’ but don’t hold that against those D.C. architects.

The most prominent place you’ve probably never noticed the fasces is actually at my favorite monument, the Lincoln Memorial. Look closely at the front of the arms of President Lincoln’s chair and you’ll see they are decorated with 10-foot-tall fasces.

In money management, I think the fasces perfectly represents a well-constructed portfolio. If you’re walking along Anne’s Beach here in Islamorada and come across a piece of driftwood, it’s usually pretty easy to break. Now put a dozen pieces of driftwood together, bind ’em up with some line and then try to break the bundle. Not going to happen. That, I think, is the message behind the fasces symbol for investors – it gives them the power to withstand market downturns, unexpected company developments and economic shocks.

I try to build my Spoke Funds® at Islamorada Investment Management the same way. No matter how much time you put into researching a company, it’s just a fact that one of the businesses you own could develop a problem and, well, break. But if you take a handful of good companies and bind them together, even if one breaks, the bundle will hold up fine. And fortunately, as I mentioned earlier, your bundle doesn’t need hundreds of sticks. A dozen could do it.

There is one problem with my little metaphor here, though: don’t just go buy any stock that washes up on the beach. Try to learn as much as you can about value investing, and head inland to find the strongest sticks you can.