Portfolio Pizza Pie

By Mark Bertrang, The Creator of the Financialoscopy® on Thursday, April 28th 2022


I love pizza.  What’s not to love?  My favorite is what I like to refer to as a garbage pizza, which is basically an ‘everything’ pizza.  Other than the tomato paste, I want pepperoni, sausage and mushrooms, onions, olives and green peppers, garlic and oh, hey I’m from Wisconsin, so I have to have extra cheese; but, please, please no pineapple.  I’m sorry. I just don’t understand pineapple on pizza. Yet, I’m married to a pineapple pizza person.  So, guess what?  Yes, at least half of the pizza has to have pineapple.

I was thinking about this example of a delicious pizza pie recently as I was reviewing portfolios with a client by telephone.  The client began the conversation about the pie chart on his quarterly statement.  Are there any pieces of this pie that’s dragging down the performance of my investment was his question?  The pie chart in question listed about fifteen different elements or ingredients of the market where the wedges were different kinds of stocks or bonds, international or cash, growth or value.

To make the pie complete, I said, you need all of the ingredients to be well balanced; and then I thought to myself – Yes, you even need pineapple, even if it’s not a topping you really care for. A well-diversified pie chart of a portfolio may include items you may not particularly care for; but, are you cooking just for one person under only one specific situation? You’re going to be lonely if you’re only planning for a party of one.  Sorry, but I would rather not even eat a pizza if it’s simply a plain cheese pizza without any additional toppings.

Take it from me.  Pineapple won’t kill me and certain investment segments probably won’t be too distasteful to you, over the time of proper diversification. Given that time, you and I might actually find that it’s the appropriate combination of flavors and investments to satisfy our taste in pizza and diversification.    

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