The Olympic Investor - The Traits Shared by the Greatest Athletes and Investors
Every four years, the Summer Olympic Games provide a glimpse into the unifying power of sport. The 2012 Games from London are no different and provide a welcome reprieve from the conflict and discord around the globe. We should all marvel at and respect the commitment, sacrifice, and dedication that go into becoming an Olympian. Think about it—Olympic athletes train their entire lives to participate in an event that lasts only minutes or seconds. The 100-meter dash, pommel horse, high jump, springboard—four plus years of work come down to one moment, one chance at eternal Olympic Glory.
While we may be caught up in the feel-good aspect of the Olympics, where else can archery, badminton, and table tennis share the stage with basketball, soccer, and track and field? It is precisely this broadening of opportunity which often provides those quintessential Olympic moments—those that are not just about medals but highlight the intersection of preparation and opportunity. While reflecting on the traits needed to reach this pinnacle of sport, we began to wonder if there was an overlap between Olympian traits and those of a successful investor.
After some thought, we decided on the following common traits:
1. Successful investors are disciplined—Successful investors, like Olympians, must be disciplined. They must forgo short-term pleasure for long-term benefits. They must also maintain conviction, often in the face of uncertainty, and be willing to deal with doubters and criticism. Both Olympians and investors must maintain resolve and constantly seek the best opportunities to reach long-term goals.
2. Successful investors understand their strengths and weaknesses—Most athletes have a specialty. There are sprinters and distance runners, springboard and platform divers, single-event gymnasts, backstroke swimmers, and freestylers. The same is true for investors. Having a specialty allows people to understand their strengths and weaknesses and focus on their core competencies. For investors, specializing is not so much about investing in a particular asset class (i.e., stocks, bonds, real estate) as it is about staying true to a specific discipline. Investing that is fundamental, momentum-driven, technical, computer-modeled, trading-driven, or buy and hold—each is a specialty that can be rewarding, but rarely can people invest successfully and consistently across multiple specialties.
3. Successful investors are patient—Successful investors are very patient. Much like Olympians, they must recognize that patience is a virtue, one that calms emotions and leads to making decisions with the end goal in mind. Apple Computer is a great example of exercising patience.Many people may not realize that Apple’s stock price from January 2006 to February 2009 remained nearly flat at about $80 a share. Investors who didn’t have the patience to let the full story play out might have sold after a mediocre three-year return and missed out on a seven-fold increase.
4. Successful investors are voracious learners—Warren Buffet’s business partner, Charlie Munger, says, “In my whole life, I have known no wise people who didn't read all the time—none, zero.” The same is true for Olympians. They study technique, video, timing, past champions—all to have an edge. Fortunately, learning is cumulative and can be applied successfully by those who are constantly seeking to improve.
At the end of the day, most of us will not become Olympic athletes, but if we train hard and stay focused, we can become great investors. Stay disciplined, be patient, constantly strive for knowledge, and know your strengths and weaknesses and you can have an “Olympic” investing career.