Markets Have Seasons—And So Does Your Portfolio

As we settle into another Colorado winter, my mind shifts toward the seasons — their predictability, their necessity, and how much they reveal about what truly lasts. Even as the final bits of a colorful autumn fade, the gardener knows that winter isn’t something to fear but to anticipate. Their landscape hasn’t died. Under the soil or beneath bare branches, it’s just resting, storing energy, and preparing for the next bloom.

When winter arrives in the markets, however, investors often see a very different scene. Falling prices feel like permanent frostbite. Bare branches look like a dead portfolio. And headlines shouting cold half-truths make people assume their “garden” may be done-for.

But markets, like nature, move in seasons. Advances, pullbacks, recessions, and recoveries are not evidence of a system breaking but of a system working. What matters is whether your portfolio is built to recognize this truth.

Howard Marks of Oaktree Capital captured it well when he wrote that security prices fluctuate far more violently than the actual intrinsic value of those businesses they represent. Simply put, seasons change, but the tree remains a tree. What causes most investment mistakes is simple: Investors confuse the weather with the roots. They mistake emotional price swings for permanent changes in value. But winter is not death; it is only dormancy. Beneath frozen soil, the roots are doing exactly what nature designed: holding firm, conserving strength, and preparing for the next season of growth.

Well-run businesses behave the same. During difficult economic seasons, earnings may slow or even contract. Managers tighten operations, cut unnecessary costs, strengthen balance sheets, and position for an impending spring. These companies are like perennial plants that endure frost, heat, hail, and drought yet return each spring, often with renewed strength. Their roots run deep — built for seasons, not moments.

Annuals, on the other hand, can be beautiful … briefly. They bloom quickly, attract attention, and dazzle in perfect weather. But the moment conditions change, they wither. Their roots are shallow and their strength temporary. You might enjoy them for a summer, but you cannot rely on them when the weather turns.

“Perennial companies” are those durable, dividend-growing enterprises that provide the goods and services we use every day—electricity, medicine, toothpaste, groceries, broadband. They survive recessions, inflation cycles, supply shocks, and political storms. They don’t depend on perfect weather to produce. Their earnings may temporarily dip during a harsh winter, but their long-term strength remains.

By contrast, “annual companies” shine only in favorable conditions. They’re often fad-driven, highly leveraged, or overly sensitive to economic cycles. They fall hardest in downturns and sometimes don’t rebound at all. They might make headlines but rarely make history.

So is your portfolio built around perennials or annuals?

When winter comes, inexperienced gardeners panic. They see empty branches where leaves once fluttered freely. They see frozen soil as stagnation or loss, not as preparation or the promise of spring.

Investors often behave similarly. They assume falling prices equal falling value. They confuse temporary declines with permanent damage. They abandon long-term plans for short-term comfort. They try to time the seasons instead of expecting and preparing for them.

Howard Marks’ point bears repeating: Prices are volatile because human emotions about risk are volatile. Fear spikes quickly, and headlines amplify that panic. But those same headlines don’t cause enduring businesses to lose one-third of their intrinsic value in a month.

Investors routinely behave as if winter is permanent. But just like a gardener would never declare their perennials dead just because January looks bleak, good investor behavior recognizes that winter is always transitory. Successful investing is not about predicting when winter will begin or end. It’s about owning businesses that can survive frost and flourish again in spring.

Dividend-growing companies are the perennials of the financial world — with their deep roots, prudent managers, and resilience to adapt through changing conditions. Their dividends, while never guaranteed, historically stay remarkably stable. Even in harsh winters, many companies continue to raise their payouts — quietly strengthening an income stream. This matters more than most investors realize. Over time, the durability of a portfolio’s income impacts investors more than any price swings. Dividends that grow faster than inflation can help defend retirees against their greatest risk: the erosion of purchasing power.

As winter and its first snow settles over Colorado, you may want to ask yourself these simple questions: Does my portfolio understand the seasons? Does it rely on perfect weather, or is it built to endure frost and thrive again when conditions change?

If your portfolio is full of annuals — companies that only look good in sunshine — you may be taking more risk than you realize. If it’s built on perennials, the temporary cold should not frighten you. The roots are alive. The garden is preparing. Markets will continue to cycle. Prices will rise and fall far more dramatically than business fundamentals. Headlines will shout that each winter is unprecedented. But winter remains just a season, and spring always comes.