Reprinted courtesy of the National Post
by Tom Bradley
It’s 6 a.m. on Wednesday morning. I’m still a little groggy, but am sitting on an indoor bike ready to get beaten up and contemplate life.
Yes, my spin class offers both. That’s because Steph Corker is not only an iron woman and thoughtful instructor, she’s also a pop philosopher. She always gives us something to think about while we’re grunting away. She loves Seth Godin, one of my favourite bloggers and even talks about Warren Buffett occasionally.
Spinning with Steph prompted me to think about what cycling and investing have in common. Here’s how her coaching aligns with my investment advice.
“Warm ups are important to get your body ready for some high intensity intervals.”
Investing is counter intuitive. It’s not like any other consumer decision you make. Returns come when you least expect them. If everyone else is doing something, it’s likely the wrong thing to do. And what appears to be good news sends stocks tumbling and vice versa. Needless to say, it takes time to understand.
So, the earlier you get started, the better off you’ll be for when the amounts are bigger and the ‘intensity’ amps up. Even young people focused on saving for a down payment or pounding down their mortgage should put a few thousand dollars away and start learning. Consider it a long, slow warm up.
“The hard stuff provides the most benefit. It’s all about effort. Pushing yourself when you feel like you have nothing left.”
In the case of investing, this means putting money aside when you’d rather spend it. Reading your statement when you know the news is bad. And making the hard call to change your adviser, even if you consider her a friend.
“Time. Time. Time.”
When I’m out biking, I still get passed by commuters on cruiser bikes, but I’m getting stronger and ever so slightly faster. This riding thing takes time. The great thing about investing is you have the power of compounding working for you (earning returns on your returns), which is even more of a sure thing than getting in shape (sorry Steph). But as with riding, the multiplier is time.
“Stick to a routine.”
Steph talks often about her health priorities: (1) sleep, (2) meditation, (3) good, green food and (4) sweat. But she always adds at the end, “Never miss a workout!” Having an investment routine is an essential part of successfully dealing with the ups and downs of the market and, more importantly, your psychological weaknesses. When possible, make the process as automatic as possible. For instance, set up monthly contributions, review and understand your statement every quarter, and meet with your adviser or portfolio manager annually.
“Technique is everything, because how you do anything is how you do everything. It doesn’t matter how far into the workout you are, your technique should never be compromised. Technique is more difficult as we get fatigued, which means we need extra focus to not be mediocre.”
Steph is at her best here, but I admit, I couldn’t see the analogy to investing at first. After all, isn’t it all about time and sweat? Is technique really that important, especially for an amateur like me?
But after further reflection (and grunting), I came around. Having a plan (asset mix and investment approach) and sticking to it is paramount. Not letting it break down when it’s getting boring or hasn’t been working lately. And not changing your mix at the most extreme and emotional times in the market. Those are the times you need technique the most.
I’ve tried to stay true to Steph’s advice, but I’ll admit to leaving out the parts about “endorphin highs” and “sleep is king.” I couldn’t see how they’d increase your returns. In any case, I’ll give her the last word.
“There is something really special about the feeling of topping a mountain where the work and effort builds progressively. Imagine if our money grew like that too!”
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