Investment Metaphor #14: Fattoush Salad

Investment Metaphor #14: Fattoush Salad

Zachary Fruhling
Fattoush Salad

Fattoush Salad

My wife made fattoush salad for dinner last night. Fattoush is a traditional middle-eastern salad consisting of tomatoes, cucumbers, bell peppers, garlic, olive oil, lemon juice, and toasted pita bread. It occurred to me, while eating my bowl of fattoush, that fattoush salad would make an excellent investment metaphor.

Fattoush salad is characterized by a blend of textures and flavors from a number of ingredients, all of which must be balanced together to avoid one ingredient dominating the others. Too much garlic, and you will be repelling vampires. Too much lemon juice, and pucker up. The proper blend of ingredients results in a salad that is flavorful and balanced.

Like fattoush salad, an investment portfolio is made up of a number of ingredients that must be properly balanced. The ingredients could be individual stocks across market sectors, mutual funds across a range of market cap sizes, or a diversified portfolio of ETFs. If these investments do not remain properly balanced, one or more ingredients in your portfolio will begin to dominate, increasing your risk by decreasing your diversification.

Fattoush salad is a very simple salad (see the recipe below), but it was absolutely delicious and one of the best salads I have ever had. Investing, too, is very simple. Either purchase a broad market index fund (which is already diversified), or invest in a handful of stocks or mutual funds representing different market sectors. Invest a portion of your income steadily, regardless of whether the stock market is up or down. And be sure to reinvest your dividends.

Finally, to follow the investment metaphor to its logical conclusion, if your portfolio becomes unbalanced due to one sector or investment outperforming the others, rebalance your portfolio periodically to maintain the proper ratio of investment ingredients in your portfolio. Diversification is the key to steady growth and mitigated risk for retirement investing.

Fattoush Salad Recipe:

2 Cucumbers, peeled and chopped

5 Roma Tomatoes, chopped

1 Yellow Bell Pepper, chopped

1 Red Bell Pepper, chopped

1 Bunch of Parsley, finely chopped

1 Sprig of Mint, finely chopped

Several Cloves of Garlic, minced (to taste)

3/4 cup Extra Virgin Olive Oil

Juice from 1 Lemon

Toasted Pita Chips (Bake at 325 degrees for half an hour)

Salt (to taste)

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