What BBQ Taught Me About Investing 🍖
BY JACKSON WOOD, LIFTOFF FINANCIAL PLANNING
One of my favorite things to do is to cook BBQ. I’ll admit that I’m still a novice at the art, but making delicious food (or at least trying to) has certainly become a hobby of mine. I first got the idea to attempt barbecue when my amazing wife gave me a Big Green Egg as a gift. Prior to that, I thought that cooking BBQ was just a quick thing you did in the summer. As I put together the grill on a Saturday morning, I ended up reading the entire recipe book that came with it. My mind was blown as I realized the variety of things I could create on my new grill.
My stomach was rumbling as I read through the list of things I could cook, and I decided to jump on YouTube and figure out how to get started. Somehow, I stumbled upon the channel of Aaron Franklin, arguably the best Pitmaster of them all. I watched all of his tutorials and decided right then to cook a brisket. I drove over to Costco, spent about $45 bucks on a 15 pound piece of beef, and raced home. Preparation started by trimming off the excess fat, and seasoning the entire slab of meaty goodness. The process took about an hour. The fun continued with heating the grill up to 225 degrees. After about 30 minutes, I was ready to go. I put the brisket on the gill, inserted the thermometer, and sat back ready to watch the meat cook. It took forever.
I. Was. Starving.
I waited about 8 hours until something called “the stall” happened. When you get to the stall, you have to take the meat off the grill, wrap it in butcher paper (insulating the meat) and put it back on the grill. This allows the temperature of the meat to rise high enough to finish cooking (for another few hours). I pulled it off the grill at 204 degrees, which was apparently the best temperature. At this point, the only thought on my mind was eating, but I couldn’t eat it yet. I had to let the meat “rest” for about and hour so that it was tender and juicy.
For the record, the adventure started at Costco around 10AM, but the first bite didn’t happen until well after midnight. My wife had long since eaten dinner, I was exhausted, and I by the time I was actually able to enjoy the fruit (meat?) of my labor, it was nearly 2:30AM. Was it because the meat didn’t taste good? No. It was excellent (if I do say so myself). It was because I didn’t align my expectations to reality. I was hungry, I rushed into the cook, and I didn’t appreciate the entire process of cooking BBQ. Aaron Franklin starts cooking his BBQ at about 2AM and it’s ready for his customers to enjoy by the afternoon.
Just like learning to cook BBQ, the markets will also test our patience. Sometimes you’re just ready to eat delicious food but you’re forced to wait through “the stall.” You want to be rich but the market goes down for the entire year. It might even go down for a few years. Sometimes things in the market just make no sense.
Here’s the S&P 500 from 1/1/2007 to 3/9/2009:
You’re forced to just throw your hands in the air and say that you have no idea what’s going on. Just like we have to wait patiently for the BBQ to finish cooking, we also have to wait a very long time for the market and our financial plan to show their true power. Had I given up and went out to eat, I would have never enjoyed the BBQ I cooked after I finally forced myself to wait.
It’s the same with financial planning and investing. If we give up after a few bad months, or even years, we never get to enjoy the benefits our planning allowed in the first place. The greatest things in life take time, and sometimes a lot of it. Having a child takes 9 months, building an amazing relationship with your spouse takes time.
Quitting isn’t an option.
You might have heard of Berkshire Hathaway. Berkshire is one of the most successful companies in America. The CEO is a man named Warren Buffett. His partner is a man named Charlie Munger. When Warren and Charlie started out, there were actually three partners: Warren Buffett, Charlie Munger, and Rick Guerin. The three of them used to make investments together. They ran separate funds, but they worked very closely together. They actually did the research together on one of their most successful deals of all time, See’s Candies (details here). After a while, Rick pretty much disappeared, and no one today really knows about him. Warren Buffett said that the main difference between the three of them was the fact that he and Charlie were not in a hurry to get wealthy. They knew it would happen. Rick, on the other hand, was in a hurry to get rich. Warren said that Rick was just as smart as him and Charlie but that they were patient while Rick took a lot of risks. Those huge risks that he took during his quest to riches eventually led to his financial downfall.
Warren’s advice is simple. He says, “if you're even a slightly above-average investor who spends less than they earn, over a lifetime you cannot help but get rich if you are patient.”
Here’s the S&P 500 from 1/1/2007 until now:
Patience is the key. Patience in cooking BBQ and in financial planning is the secret to enjoying delicious food and in finding financial freedom.
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