We'll need to get to know you if we're going to join forces. To expedite that process, click the link below that best describes you.

Get Our Newsletter

Form Example

5 Investment Lessons from the Compost Pile


Sloane Ortel

Founder and Chief Investment Officer of Ethical Capital.

Composting feels like magic.

All it takes is a little bit of attention and intention to turn table scraps into rich, fertile soil. Wait long enough, and you literally get to see flowers blooming in stuff that would have been sent to a landfill.

And through the process of caring for your pile, you get up close and personal with the microorganisms that make our planet habitable. They turn cardboard, carrot shavings, avocado skins, and whatever else you throw at them into a cornucopia of life.

The human’s job in all of this is simple: give them the time, space, and air they need.

I think it’s analogous to what I do here in a few ways. First and foremost, I’m responsible for the pile of assets clients have entrusted to me. I stir it up when it needs air, do my best to keep pests out, and pay attention to everything that happens inside of it. Because it’s my job to make sure it’ll be there in the best possible form when my clients need it.

But the similarities don’t stop there. Here are a few more investment lessons from the compost pile:

  1. It’s a privilege. The physical space that’s required for a good compost setup is hard to attain for most people. As a lifelong New Yorker, perhaps I appreciate this better than most. I wasn’t able to start until after my 32nd birthday because I had no outdoor space to call my own. Similarly, the raw materials required to build an investment portfolio are out of most people’s reach because the key resource is money. And most people don’t have a lot of it. That’s why I designed this firm so that we could work with people who share my values regardless of how much they have available to invest.
  2. Time is in charge. There’s no sense in trying to rush compost. I’m sure someone would be happy to sell you a high-end machine that speeds things along, but that isn’t needed or necessary if you approach your pile with patience. The same thing is true with investing. There are all sorts of trading strategies that people use to try and accelerate things, but the result often unnatural, costly, and worse than the returns that accrue to patient investors.
  3. Balance is everything. Most compost piles feature a roughly three pounds of “browns” like shredded cardboard or dead leaves for every pound of “greens” like table scraps and plant cuttings. The balance ensures that the microorganisms in the pile have the correct amounts of carbon for energy and nitrogen for protein production. Similarly, portfolios should balance out investments in higher-risk innovative companies with allocations to more established enterprises and sustainable real estate to ensure we have enough stability to weather whatever may happen in the market.
  4. Diligence matters. Anything that makes it into your compost pile may eventually wind up in your food. So it’s important to make sure that the plastic wrappers, cigarette butts, and other miscellaneous waste that often materializes outdoors (at least here in Brooklyn) get dealt with safely. I run all of the soil through a variety of screens to make sure nothing bad makes it into my garden, and I do the same thing with the companies in our portfolio to ensure they reflect the values of our clients and their communities in addition to solid risk-adjusted return opportunities.
  5. Nothing is wasted. Even just having a compost pile changes the way a garden works. Plants that don’t make it get reconstituted into the rich, black earth that feeds the next generation. It’s the same way with investing, where we’re able to learn something from every opportunity we analyze, even if we only wind up investing in a handful of them.

I hope that’s been an enjoyable exploration of some commonalities between tending a garden and taking care of an investment portfolio! If this has piqued your curiosity, you might be interested to learn more about our strategies.

If you’re interested in learning more about composting, here are a few great places to start:

If you liked this post, let's keep in touch!