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Investing like Long Distance Running

naitik | July 16-2020 April 4th-2021 | No Comments
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What does investing in the stock market & running a marathon have in common?

Running long distances requires a lot of stamina and mental strength. It takes hours of deliberate practice, self-belief, and doses of strength training.
Is investing any different? You’ll figure out in.
Let’s assume you have practiced and you have all that requires running a marathon covered. Cut to the day of the actual marathon and how you can think of it as similar to investing.
Let me divide it into 4 parts of 10km’s each for simplicity assume full marathon is of 40kms exact.
The race flags off after the Zumba warm-up and you’re all fired up and excited. You leap and run at your maximum pace leaving everyone behind for a brief moment. This is akin to when you start your stock market journey with your initial capital having read all those books and thinking you know everything but having zero market experience.
Let’s say you do earn a decent return on your first idea but they are book profits and before you realize you start losing money in a similar manner people overtaking you within the first few km of the race.
You slow down your pace because you realize you won’t be able to hold it for long. You need to do the same thing in investing figure out what you will be able to do for a long time and adopt that strategy.
You complete the first 10kms of the race akin to surviving your first few years without permanently losing your capital.
The next leg begins where you have little experience in the stock market. The next 10kms are going to be brutal and you will oscillate between increasing your pace and decreasing it from time to time. Akin to being aggressive and defensive in the stock market based on your experience & understanding. You clear the 20km mark successfully.
In the next 10kms, you plan your pace for every additional km that you run and are conscious about slowing down to rest, hydrating yourself, and being more mindful of what internal dialogue you have to motivate you to cross the finish line. It would be useful to draw a parallel here to writing down an investment philosophy for yourself, a checklist before pulling the trigger to buy or sell, and to keep your emotions in check.
You cross the 30km mark and you’re happy. Hold it because you have the last 25% of the race still pending. You get a grip on the pace that you will be able to maintain in the last leg of the run. You enjoy the run at the same time being cognizant of the time left according to your goal.
This is akin to your personal financial goals, planning for retirement, and proper asset allocation. Every investment you make should be customized to cater to your needs in the present & the future.
The marathon begins from the day you decide you want to run. The practice for the same can be treated as reading super texts on investing in stock markets like “The Intelligent Investor” by Ben Graham. The nutrition night before the day of the run is like the due diligence you do on the company before investing.
The warmup before the run is going through your investment checklist before running. Reviewing your pace, distance covered and time left is like reviewing the company’s performance and setting your expectations from the same.

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