I recently made my first, tentative foray into the stock market. I know very little about stocks and shares, but what I have managed to glean so far is this: diversification helps inoculate against risk. Diversifying your holdings, by spreading them out across multiple kinds of investment or country or genre or ‘asset class’, means that if there’s a crash in one area, you’re still (hopefully) not going to lose out too much. I’ve been wondering if this is a useful analogy for professional work in the creative world.
[…] diversification is the investing equivalent of a free lunch. Research suggests that, not only is it the best way of managing risk but, over the long-term, also leads to higher returns.Lars Kroijer
In the past six months, we’ve experienced the equivalent of the bottom dropping out of the creative market. Anything creative that was generally done in front of other people became mostly impossible, overnight.
Everyone going into a creative profession, especially as a freelancer, knows the risks. Precarity. Uncertainty. Vulnerability to market forces completely beyond our control. But just as in investment, in return for accepting the higher risk, we receive various rewards: maybe it’s a degree of control over our lifestyle, or flexibility with working hours.
We might be tempted to think Covid-19 is an isolated occurrence, but there have been other market-altering calamities, and there will be more to come. All manner of events can affect our ability to do what we do, be it external, such as a market crash, or personal, such as a change in circumstances, or an unexpected illness.
Is there a way of inoculating ourselves against these risks? And how feasible is it for a creative person to ‘diversify’?
In investing, you decide how much to put into the riskiest assets – equities, for example – vs the safer options – bonds, cash – by determining your individual risk tolerance. Younger people are advised to take more risks; the market generally evens out over time, meaning over a longer time-frame, you’re less likely to lose out. Those coming closer to when they might need the money are advised to shift the balance to less risky assets.
So, as someone just starting out, you might justifiably put all your eggs in one creative basket, and commit full-time to your passion. In the event of a Calamitous Event(TM), your liabilities are few, and you can dust yourself down and try again, or try something else.
But not everyone has the same tolerance for this level of risk. Those with more liabilities, or dependants, might want to swim more cautiously in these waters, to have a backup plan, or even something else running along the side.
Transferable skills and ‘side hustles’
Let’s assume for now that we want to do the latter. We’ll commit to our chosen focus, but we’ll try and spare 5% or so of our energy to keep something else on the back burner. What that something else is depends on a number of things.
The investment analogy suggests that to be diversified against risk, our supplementary activity needs to be in a different enough field that it would be unaffected by anything that might threaten our core activity. Here’s an obvious example: if our core focus requires live performance and travel, then the ideal bulwark against this year’s particular obstacle is a job that can be done at home.
If our subsidiary focus can be one that informs and enriches the main discipline, so much the better. The classic supplementary job in the world of musical performance is teaching or tutoring – leveraging existing knowledge and pre-gained experience to generate a more securely predictable income. And teaching can be just as valuable for the teacher as the pupil – something I’ve certainly found as I’ve begun to teach conducting. For me, teaching and writing have been sidelines that enhance and help me reflect on what I think of as my main discipline – and inevitably the balance will keep shifting.
We want something that will enrich and be enriched by our main specialism, but is sufficiently separate from it to avoid the same risks. Of course, not everyone will have a sub-specialism that meets these criteria, but there are other ways – perhaps there’s a related hobby that can be monetised.
I’m wary of what’s become known as hustle culture – the idea that we should always be trying to monetise our activities, spending all our time thinking of new ways to make money. I can’t imagine it’s possible to be a reflective, creative person without a bit of space in our lives, and I’m not suggesting that we need to adopt the ‘hustle’ mindset to achieve diversification. Instead, I want to safeguard that creative space by attempting to mitigate the risks associated with it.
The world as it should be vs the world as it is
This position might seem a little cynical. Shouldn’t artists be free to pursue their art to the exclusion of all else? The answer, in an ideal world, is yes, absolutely. Whether the solution ends up being a Universal Basic Income or something else, a world in which we can all exercise complete freedom of creative choice, unconstrained by market forces, or what will make money – that’s surely the goal.
However, we don’t live in this perfect world. The real world has yet to catch up to this ideal. We are, unless we are very lucky, tethered to the fortunes of the financial systems in which we live, as well as subject to the vagueries of taste or politics. For me, that awareness breeds a certain caution, and it’s why I’m going to try to keep myself, at least a little bit, diversified.
Now, you might say: Pavarotti never ‘diversified’! Da Vinci didn’t have a ‘side hustle’! Artistic geniuses always devote themselves 100% to their passions, ignoring the constraints of the ‘market’ or the ‘real world’!
Even if that were true, and even if I got away with that straw man – and I’m pretty sure it isn’t and I didn’t – most of the ‘genius artists’ we might include in this category were not only talented and hard-working, but lucky – and we might not be. So if we’re OK with embracing a bit more risk to become a bit more successful, all good. But if our risk tolerance means balancing the risk with something else, there’s no shame in that.