As many of you will know, Old Faithful is a geothermic geyser located about an hour from Yellowstone Park's west entrance. This week we braved hot weather and heavy summer crowds to witness the spectacle in person.
On arriving we heard the park ranger sum up his lecture, saying: "Enjoy watching her next burst in about thirty minutes."
Ugh. No shade. Thirty minutes. Too hot.
So popular is this attraction that all nearby view-blocking trees have been removed. A semicircle of four or five rows of benches fronts another six to nine metres of standing room deck forming a semicircle about 75 meters in diameter. About 500 tourists sat and stood patiently in the summer heat, waiting for the earth to burp.
Not much more than a couple of hundred steps away, another attraction was spewing sulphuric steam splendidly. There were a few scattered benches around this less known location, as well as several trees for shade, so we ventured our overcooked Canadian flesh toward it.
Not only was this lesser known geyser area shaded and less crowded, it was a truly spectacular display of earthly indigestion. The Castle Geyser spouted off violently, providing a magnificent display of steaming hot water and gases some 25 feet in the air, rushing out like so many foul smelling ghosts escaping, screeching from a molten mound of mineral deposits.
Our daughters stayed well back, waiting patiently out of the sun, holding their noses, and accusing me of flatulence. (Not this time). Meanwhile their mom and I took some excellent photos.
When the time came for Old Faithful to ignite, we rushed back to the substantial viewing area to get a closer look. Sure enough, she faithfully funnelled her expulsions on time. But the sight was a little underwhelming compared to her sister's spewing. The spout was smaller, the duration was relatively disappointing. The sunburned crowd wandered away faintly praising the payoff.
Another payoff:
The earth sheds forth her bounty in different ways. Like so many teaming anthills, we humans scurry around buying, selling, eating, drinking, warring, peacing, building, renovating, and, eventually resting. Absent the wet blanket of over-regulation, or the inflationary grass-fire of under-regulation, economic activity could be described as a by-product of breathing.
In order to attract the desired investors, some firms promise a steady stream of income, by virtue of dividends, or interest, depending on the investment vehicle. The crowds gather, not for the excitement, but for the predictability. Old Faithful is not known for her grandeur so much as her inevitable intervals - hence the name. Other geysers are far more impressive but not so predictable. Western Wyoming is a long way to drive only to be disappointed, thus the popularity that most famous of earth ejections.
Faithful is a term of endearment, but in the case of the reliable investment, there's no need to sit and stare. And frankly that's the point.
Every portfolio needs an element of stability. Some more than others. Companies with reliable business models, steady streams of cash flow, modest debt burdens and broad international reach will still see their share values cycle up and down, but will pay you a stable income in predictable intervals while you wait.
Other companies might provide a more spectacular potential return, but you might not know just when they will provide that spout of profit, if ever. (There is one spectacular geyser in Yellowstone which erupts somewhere between every four and 50 years). These should be limited in scope in your overall portfolio.
Several other park geysers make a massive roar but never show the visual display of the aforementioned jewels of the park. Likewise, some financial gushers make a great deal of noise but never have much to show for it. No glorious stream of cash flow, just a bunch of hot, steady, stinky air, invisible to your pocketbook.
In the corporate setting, hold your nose and walk away from these. If you wouldn't lend them money, then be wary of the even riskier proposition of taking on the role of an unsecured investor.
Mark Ryan is an advisor in Prince George with RBC Wealth Management, Dominion Securities (member CIPF) and can be reached at [email protected].
