The Traders Journal

Academics Prove that Trading the Markets Contributes to Your Longevity

Yes, the fountain of youth really does exist, and academic research is increasingly proving it to be found amidst your investment portfolio.  A growing body of scholarly research shows that, in many ways, life can get better as we get older and being an active investor can contribute in significant ways.

As I write this, I’m 62 years young, and without a doubt, I’m a far more profitable trader today than I was 10 years ago.  I expect to be even more skilled in another 10 years as my expertise deepens.  It’s as if the “intuition gap” that separates me from the market continues to narrow.  I’ve worked all my life to make that gap smaller and smaller.  I chose to believe that is why they refer to them as the ‘golden years’.  Without getting too metaphorical, it’s like the distance between me and the market has become a relatively narrow space such that I can nearly reach across the chasm and touch the other side.

Before you dismiss this stay-young-by-investing thesis, consider the investment track records of some mature money managers such as Warren Buffett, John Templeton, George Soros, Shelby Davis and Philip Carret who all practiced their craft for at a minimum of 38 years.  Some are still going strong beyond 55 years.  


Here is some of what the academic community tells us:

  1. Expectations versus reality about getting older are way off!  When polled, individuals aged 18 – 64 revealed the following about being older than 65:
    a.    57% believe they will experience memory loss after 64, when in reality only 25% actually will.
    b.    42% expect to have a serious illness when in reality only 21% will.
    c.    29% believe they will feel unneeded when in reality only 9% will.
    The point being this – don’t allow false expectations to stand in the way of your investing efforts.
     
  2. Research busts other myths.  If you stay mentally and emotionally engaged – and managing your portfolio qualifies – then the academics tell us our emotional well-being improves into our 70s when it levels off.  Yes, the peak of emotional life may not occur until well into our seventh decade.  My only personal caveat here is that I no longer trade the short side of the market.  Historically, the stock market has rewarded optimists far more than pessimists, and I simply choose to trade with the bulls versus sleep with the bears.  Emotionally, that works better for me.
     
  3. Myth:  Cognitive decline is inevitable.  Research has shown that when you remove the variable of testing in a lab and instead test in more comfortable and familiar settings, the younger participants typically recruited by professors lose their advantage.  In a comfortable testing environment, the older participants experience and knowledge shine brightly and prove their mental skills increase with age.  Believe it and keep investing!
     
  4. Okay, this is tough for me.  I’ve always believed that a sound body contributes to a sound mind, and in my own anecdotal observations of traders, this has generally been reinforced.  Where the academics tell me I need to revise my mantra is with respect to intensity.  The old cliché about “all things in moderation” turns out to be clinically based.  A number of longevity studies have shown that if you don’t exercise, you die younger, and that’s not good for your portfolio.  No surprise there.  What is surprising is that joggers (or moderate intensity exercisers) significantly outlive serious runners (or high intensity exercisers).  They call it the “overuse injury”.  It’s as if too high an intensity causes burnout and diminished longevity.  I’m sure we all know folks that tend towards this high intense end of the spectrum.  I’ve known traders that fit this bill and burned out young.  So, back to the “all things in moderation” mantra – I suggest you apply it to your investing as well and keep on truckin’!
     
  5. This is for all you young bucks who think you are so much more productive than us older folks.  Mercedes Benz did a research study where they examined the number and severity of the errors made by 3,800 assembly line workers.  They found that the older workers committed fewer severe costly errors.  Clearly, these older workers had years of experience that their younger co-workers did not, and their experience level served to deepen their knowledge and intuition, letting them avoid more severe and costly mistakes.  Given that, who would you want to manage your portfolio?  Good answer... yourself.
     
  6. Myth-buster:  Creativity has long been seen as the arena of the young.  Think Jobs and Wozniak, Lennon and McCartney.  Recent studies show that creativity peaks in one’s 20s for fields such as pure mathematics and theoretical physics.  However, in fields that require accumulated knowledge – and investing in the stock market certainly qualifies here – creative peaks typically occur much later in life.  Folks who relied on their accumulated wisdom and did their greatest work in the 50s and 60s should be the motivational team for us mature investors.  Pick your own creative hero from geniuses such as Mark Twain, Frank Lloyd Wright, Virginia Woolf, Robert Frost, Paul Cezanne, and more.

In summary, these academic studies should convince you that you have a lot of fuel left in the tank and actively managing your own investments will not just be financially rewarding but will provide the catalyst for a longer and more meaningful life.  The market is willing to reward you for your experience and your intuition.  Take it!

If you are able to remain engaged physically and intellectually, then you must believe that and act accordingly.  Don’t fall pray to stupid myths on aging.

By choosing to remain engaged, your circle of friends who share your passion for the markets will expand, your brain’s gray cells will be happier for it, and your beneficiaries will have to succeed in the real world on their own because you plan to live a long time before they ever see their inheritance!

Trade well; trade with discipline!
-- Gatis Roze

Acknowledgement:  I’d like to thank Anne Fergesen of the Wall Street Journal for providing the catalyst for this week’s blog.

|

Subscribe to The Traders Journal to be notified whenever a new post is added to this blog!

Table of Contents

This article put a spring in my step - Thanks
I'm with you. I'm 81 and have been in the market since I was 18. If you looked at my portfolio you would think I was still 18. I'm now buying oil service stocks.
Some profound thoughts Gatis! I hope many a young aspiring investor takes heed of your wisdom! Not thinking about or investing for the future will eventually lead to one realizing the loss of one's youth. As we get older and realize we don't have our whole lives still ahead of us (to take care of this), one will start to feel remorse for not having listened to all the advice to start investing for these golden years while we are young. As you also pointed out, same goes for moderate exercise. We need to take care of our financial, physical and mental health as we make our way along in our journey through life or we may find ourselves in a position where we fear rather than cherish the advent of these later life years.
At the age of 73.6 I manage a portfolio of 50 stocks and options using only my 45 years of market knowledge, over a few hundred books and articles, and a daily reading of the WSJ. I plan to continue my active trading until they carry me to the "home."
Very intriguing and well-worth-reading article. It's nice to read that it's not over for all of us seniors. Your article is well written with great tips on longevity by investment. As one of your students, I look forward to attending more of your classes, and catching those pearls of wisdom frequently in your blog.
Thank you this was needed by me, just in time delivery.
Thank you for the post. I will keep learning as knowledge is a power.
Very nicely written you give me hope..
comments powered by Disqus