The Traders Journal

Olympic Caliber Investing

Image001I’ve been teaching college extension classes for over ten years, and I invariably see a disproportionate percentage of new investors being drawn to investing because they envision themselves as lone wolves and believe the markets provide an arena where they can fly solo and succeed. Nothing could be further from the truth. 

It takes a village to raise a child. If you are a parent, you know this to be true. It takes a community to produce an Olympic athlete.  Any Olympian will attest to this.  It takes a support network to produce a successful investor. Unfortunately, many investors spend years fighting this reality —to the detriment of their trading. They believe denial is merely a town in Australia. 

 


 
The fact is that there exist powerful parallels between investing and athletics. It would benefit those lone wolves immensely if they would just begin thinking about investing as an Olympic sport.  One of my closest friends has been the prison chaplain in Eugene, Oregon for decades. Eugene is often referred to as “ Tracktown USA”, and it has earned this name for good reason. I just returned home after a four-day visit there with my friend, Dan, and witnessed some stellar competitions at the Olympic Track and Field Trials. The USA team’s moniker is “ the hardest team in the world to make.” The Trials are all about competition – just like the stock market.

I’ve been visiting Dan and going to track meets in Eugene for four decades, so naturally we spent hours discussing how we’ve both grown over the years in our respective careers. We talked about the changes in our priorities and our families and, of course, we marveled at how and why athletes today can jump higher, throw farther and run so much faster than years ago. Here’s where the powerful parallels align.  As we talked about the extensive support network that these Olympic-caliber athletes require, I realized that each point we checked off had a similar and corresponding analogy in my trading world.

 

  • Phil Knight, the co-founder of Nike, was there surveying the field. His high-tech shoes and equipment have been a major contributor to impressive performance improvements over the years. Now consider how our own investing arena has changed over those same decades.  Information delivery systems run at the speed of light.  There are unbelievably powerful new technical toolboxes available to individuals investors. Imagine this:  twelve years ago, StockCharts.com did not exist; thirty years ago, the internet did not exist.  As an athlete or as an investor, one must embrace the newest equipment at hand or risk being left behind.
  • Dan and I had seats next to the extended family of Lashinda Demus who won the Women’s 400 meter hurdles and is off to London to represent the USA. What became immediately obvious to us is that she would never have made the Olympic team without the support of her deeply committed family and friends. Whether you are a serious trader or a recreational investor, the probabilities for your success will increase significantly if you are able to include your family and significant others. Help them understand your goals and they will in turn help you achieve those goals. There was a touching story in the newspaper about Matt Centrowitz, the 1500 meter Olympian, and it highlighted the support, wisdom and experience offered him by his father, himself a two-time Olympian. Family matters!!
  • As a chaplain, my friend Dan invests in commodities of a different type than I do, but I still respect his unique skill set.  After forty years, I also admire how he’s grown into a sophisticated track and field spectator. One of his keen insights was that over the years the athletes change but the coaches seem to stay the same. Absolutely true!  John Smith and Bobby Kersee always seem to bring top athletes to the Trials. I’ve always believed that “you become the company you keep.”  Perhaps that is why many of my best friends are traders (with a prison chaplain thrown in for good measure). They are the equivalent of coaches and mentors to me. Winners beget winners in athletics just as in trading.
  • In the Olympics, there is an event for every talent, body type, gender or personality. You must be candid and brutally honest with yourself about your own strengths and weaknesses. If you can achieve this, athletics will embrace and reward you. The stock markets extend the same invitation but demand the same candid honesty. Find your appropriate niche and you’ll be embraced and rewarded.
  • And then there are the nuances and the dramatic moments of competition. I acknowledge that my students and fellow investors bring out the best in me and make me a better trader.  This is indeed one of the reasons I continue to teach. But having said that, I never lose sight of the fact that until the markets close, we are competitors and I will try to take their money.  That’s the law of the jungle. A perfect example of this was in the men’s 20-K walk. Tim Seaman is the American record holder but also coaches a teenage thunder cat named Trevor Barron.  He obviously did a sensational job. They both competed with a visible intensity that many would deem impossible in a walking race.  At the finish line, Trevor beat Tim Seaman.  Not only had the student triumphed over his coach, but he surpassed his coach’s very own American record to boot.  Side note to you joggers:  he averaged 6.39 minutes per mile walking!!! 

As the Olympic Trials wound down, Dan and I revisited a lifetime of memories and discussed how our respective lives and respective worlds have evolved and been influenced by so much around us.  This year, we didn’t solve all the problems of the world but we agreed that he’s a better chaplain and I’m a better investor for it. We’ll do it again next year.

Some closing thoughts:

  • Despite what you might want to believe, it’s best not to go it alone as an unaccompanied soloist investing in the markets.
  • There’s no mystery.  Just as in athletics, if you train wisely, your trading will improve – I guarantee it.
  • Don’t swing for the fences and only try to hit home runs. Base hits are fine.  You can still be an Olympian if you place third in the race.  Small winning trades add up.
  • Keep in mind that investing is always a competition, and it demands that you bring your “A” game to the table.
  • Athletes may achieve the same mile time by very dissimilar roads.  Investors, too, may achieve similar success but by various dissimilar methodologies.  That’s okay.
  • At the US Olympic Trials, what you’ve achieved in the past is totally irrelevant. The only thing that matters is your performance on this particular day. Stock markets also don’t care what you did yesterday. It’s only the here and now that matters.
  • Stay healthy.  It will always be much harder to compete if you are injured emotionally, physically or financially.

Trade well; trade with discipline!
-- Gatis Roze

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