Great Wines & Portfolio management .....Process & Patience!

For centuries, great wine makers have relied on a blend of “art and science” to develop a process that consistently produces wines celebrated worldwide.  Generations of families have passed along the results of the lessons learned thru hands on experience -  successes and failures -  to those following in their footsteps.  When reading about these renown wineries, a few themes come thru in each of their histories and approaches – a commitment to Process and Patience!

Process and Patience - the latter of which most educated in the US struggle with.  We all were taught to identify the problem, develop and implement a solution – immediately.  Fastest to the finish line wins….or in my classmates case - at least gets the A!



When mother nature douses the vineyards with the wrong blend of rain and sun at the wrong part of the harvesting cycle– you will not see the most respected winemakers completely abandon their process. Cellar masters may temporarily tweak the current years blend or implement some recent scientific advances to maximize the drinking potential the impacted crop, but they will never completely change their long term process. Additionally, they will not scramble to put into place today what would have benefited the crops quality and yield had it been implemented a year ago.

The same thoughts should apply to long term portfolio management for investors.  There are two process’s that should be understood by both the investor and the advisor.

  1. How did the specific Mutual Fund, Exchange Traded fund or Individual Holding become a part of the overall portfolio? (role it plays in the overall allocation, risks taken on, costs, etc.)
  2. What is the internal process of the fund management team – how do they arrive at the components of their portfolio?  Your advisor should know absolutely know this. An advisors Due Diligence should consist of far more than “their numbers have been good and they have a 4 Morningstar rating”! In addition to the standard numerical metrics,   Investment philosophy, Risk mitigation process, internal fees, active security selection & sale process, duration, etc. all should be part of an advisor’s due diligence of a fund.  Furthermore, this due diligence exercise should be repeated by the advisor regularly.

The above process sounds reasonable – however it is done by relatively few advisors and even fewer investors.  “Funds of the month, corporate developed models, 5 Star rated or last year’s best performers” are frequently recommended but for not understood.  It’s never a bad idea to ask your advisor “Why?” and wait for an answer.


Once the due diligence has been done on an investment portfolio and enough “Whys” have been asked and answered – deep breath and embrace patience.  Let the portfolio soak in the “big oak casks” for a few years and let it mature (sounds oddly a bit like parenting as well!).  In the instant information world we all live in, sometimes daily and weekly comparative numerical measurement leads us to knee jerk reactions – and we violate the message on the old commercial featuring a dramatic Orson Wells speaking on behalf of Ernest and Julio Gallo Winery “to never sell a wine before its time”!  At Piedmont Wealth Advisory – we have and continue to invest considerable time in the Process on behalf of our clients.

In closing –  take as much if not more time understanding the processes and investments an advisor uses than you do vigorously comparing weekly performance against an arbitrary index. 

Process and Patience – if those don’t work – break out the PWA wine glasses and pour yourself some wine!   Cheers!