The Three Little Pigs

By: Megan Makuck, Fall 2017 IAC Student Intern

Once upon a time, there was a mother who had three little pigs.  Once they grew up, she sent them into the world, each with $10,000 to grow their fortunes.

The first little pig was very lazy.  He did not want to invest his money at all, so he put it all into bonds.  The second little pig worked a little bit harder, but he was still lazy, and he put all his money into energy stocks.  Then they sang and danced and played together the rest of the day.

The third little pig worked hard all day to build his portfolio of investments.  He included stocks and bonds, large-cap and small-cap, short-term and long-term.  It was sturdy portfolio that could withstand the largest of market fluctuations.

The next day, the wolf, Mr. Market, happened to pass by the office where the three little pigs kept their money; and he saw the first little pig’s bonds.  He thought it would be fun to lower the treasury rate and his mouth began to water.

So he knocked on the door and said, “Little pig! Little pig! Let me in! Let me in!”

But the little pig saw Mr. Market’s big fluctuations, so he answered back, “No! No! No! Not by the hairs of my chinny chin chin!”

Then Mr. Market showed his teeth and said, “Then I’ll huff and I’ll puff and I’ll blow your investment down.”

So he huffed and he puffed and he blew the investment apart. The first little pig escaped and ran away to hide with the second little pig.

Mr. Market continued down the hallway and he passed by the second portfolio made of energy stocks.  He saw the account and smelled the pigs inside.  His mouth began to water as he thought about crashing the energy industry.

So he knocked on the door and said, “Little pigs! Little pigs! Let me in! Let me in!”

But the little pigs saw Mr. Market’s vacillations, so they answered back, “No! No! No! Not by the hairs of our chinny chin chin!”

So the wolf showed his teeth and said, “Then I’ll huff and I’ll puff and I’ll blow your investment down.”

So he huffed and he puffed and he blew the investment down.  The two little pigs scrambled away as fast as their little hooves would carry them.

Mr. Market chased them down the hall, but they made it to the third pig’s investment portfolio before Mr. Market could catch them.  The three little pigs were very frightened.  They knew Mr. Market could topple their investments.

So Mr. Market knocked on the door and said, “Little pigs! Little pigs! Let me in! Let me in!”

But the little pigs saw Mr. Market’s recession coming, so they answered back, “No! No! No! Not by the hairs of our chinny chin chin!”

So Mr. Market showed his teeth and said, “Then I’ll huff and I’ll puff and I’ll blow your investment down.”

Well, he huffed and he puffed.  He puffed and he huffed.  But he could not blow the investment down.  At last he was so out of breath that he couldn’t huff and he couldn’t puff anymore.  The third little pig had made his investment portfolio to withstand even the hardest of huffs and hardest of puffs.  Mr. Market could not blow his investment down.

Moral: Diversifying your portfolio is one of the most reliable ways to protect against market fluctuations.  To learn more about diversifying investments, visit FINRA.