Making a Good Life Happen – Winemaking and Investment Management
Recently, I had the pleasure of participating in two winemaker dinners in San Francisco. The first featured Greg La Follette, founder of Tandem Winery, a Pinot Noir expert previously with Flowers Vineyard & Winery. The second featured Peter Gibson, the editor and publisher of The Wine Review Online. Interestingly, the Wine Review Online credits Greg La Follete for demonstrating that excellent Pinot Noir could be made further west in Sonoma County, in colder and foggier climes than most experts thought possible.
The Effect of Different Regions and Elevations
I am not a wine expert by any means. I would say I am more of an innocent. I am most fascinated by the complexity, creativity and risk dimensions of winemaking as brought forth by Mr. La Follette in his presentation. We tasted several Pinots he had produced from vineyards in very different elevations within Sonoma County itself. One was from the coldest and most western ridge in Sonoma County which, it turns out, is even colder than any vineyard in Oregon. I was surprised by the different tasting experiences these Pinots provided depending on location and elevation of the various vineyards.
The Experience in the Mouth
One gentleman at the dinner asked Greg what the alcohol content was in a particular Pinot we tasted, a question that seemed to reflect a current attitude in the marketplace that more alcohol content is better. I loved Greg’s surprising answer. He said he, in fact, did not care what the alcohol content was. “I never focus on alcohol content; I focus on the experience in the mouth.”
When Greg said that, I leaned over to the new table acquaintance sitting to my left, who had earlier asked about our momentum-based investment strategy at Bell Investment Advisors, and told him that our investment strategy is a lot like Greg’s winemaking strategy. “We believe in following performance without prejudice. We connect with what is working in the market and avoid what is not. We are focused on creating positive momentum in our clients’ portfolios to help them achieve their goals – the experience – they are after. ” He got the parallel.
The Old World vs. New World Wine Dinner
At the second dinner, during which Peter Gibson spoke, the theme was Old World vs. New World winemaking. He spoke about how the history of winemaking demonstrates the consequences of decisions and results over time, both positive and negative. To create fine wine, winemakers have to continually pay attention to what is working and what isn’t, at tradition as well as innovation.
Tradition can sometimes get in the way of innovation. He said that at the present time, Europe is holding the flag of history and tradition. In his opinion, this seems to be shutting down creativity and innovation. Did you know that it is against the law to irrigate vineyards in France? France insists that the winemaking experience, to be fair, should depend on the mercy of nature, rain or shine. The European wine industry in general is not keen on experimentation and innovation. The different regions like Burgundy are thought to be meant only for Burgundy grapes and a few traditional derivations.
This caused me to appreciate creative spirits like Greg La Follette growing his Pinots in different locations and at different elevations. What a concept. It made me think of how often the same dynamic, tradition vs. innovation, plays out in other industries, including investment management. An example can be found in the seeming polarity between traditional methods of portfolio design, such as fixed percentage-based asset allocation, and more performance-based strategies.
The Value of a Long Hang Time
There was more. I learned that a long hang time is good for grapes and good for wine. I had not heard the distinction – long hang time – except in relation to football where you want a punter who consistently kicks the ball high and far. The long hang time gives the kicking team time to run downfield and tackle the receiver once the ball is caught. The long hang time for grapes gives the environment time to nurture and fill the grapes with the extensive complexity from the soil and the region. I learned there is a parallel here with Swedish strawberries, which are considered to be the best in the world because they take the longest time to ripen, so the environment has the longest time during which to infuse its positive qualities.
A long hang time works best for investments too.
Jim Bell, CFP® is President and Founder of Bell Investment Advisors. 1111 Broadway, 16th Floor in downtown Oakland where he co-manages the business with his wife Bonnie. The firm has been providing customized financial planning, investment management, and life coaching services since 1991. www.bellinvest.com 510-433-1066
Published in Piedmont Post on October 6, 2010