I’m no bodybuilder. These spindly arms are enough to make that clear.
But I am an investor. And after falling down the YouTube rabbit hole into interviews with the Olympia behemoths over the weekend I’ve noticed some strong parallels between what it takes to be a world class lifter and a successful money manager.
Here are five lessons I took from the pros that can definitely make us all better investors.
1. Keep your goals in the crosshairs
"I always think about my 'why'. Setting an intention can keep you fired up even when the going gets tough. it'll remind you why you started in the first place, and what you're hoping to achieve by pushing yourself." says Tia-Clair Toomey, two-time CrossFit Games Champion.
An incredibly important place to start.
If you don’t have your goals, time horizon and attitude to risk emblazoned on the back of your eyelids, how on earth can you go about hitting your targets?
The assets you hold need to match your investment personality and what you’re aiming to achieve - having these both firmly in mind will stop you straying into the weird and wonderful stocks that just don’t suit you.
Another thing - there will be times when it’s obvious other people are investing differently to you. That doesn’t necessarily mean they know something you don’t, nor does it mean you’ve got an edge on them.
What it does show is that we all have our own individual takes on the market ups and downs that we can put up with, and our own unique aims.
The same company can look incredibly risky or a sensible choice depending on whether you retire tomorrow or in 30 years and how much of a ride you want along the way.
At times it will feel like you’re doing the absolute opposite of everyone else. If you are sticking to your process, don’t give into the noise and plough on.
2. There are no shortcuts
One thing painfully clear among the athletes I watched was how lonely a pursuit it can all seem. And the same is true in investing.
When all is said and done you can’t blame or thank anyone else for your results.
But either we acknowledge that we need to take control of the task in hand, and the work involved in doing it, or we accept that we’ll never make it.
Of course, where there’s work involved some people will always try to find the easy route.
As eight-time Mr. Olympia Ronnie Coleman puts it, “Everybody wants to be a bodybuilder, but nobody wants to lift no heavy-a** weight.”
And investing is no different. We all want that 10-bagger without having to do the research to find the company, follow it, invest through the troubled times and come out on top.
But, rather than wasting energy on the money-for-nothing route, just get in the investing gym and train.
Valuation methods like Price to Earnings should be a staple of your process - helping you put a value to the hunch you have and adding a huge amount of credence to your decision to invest or walk away.
High PE ratios can mean the share price is high compared to the company’s earnings, so it might just be overvalued unless earnings catch up.
Low PEs can mean the opposite - the shares could be low compared to earnings and are waiting on the market bringing the share price up to meet reality.
Both worlds can seem glamorous but the reality is the work behind the scenes is rarely what makes the headlines. In investing, if it’s exciting there’s probably something not right.
It’s about putting in the incremental effort, knowledge and skills to create something truly brilliant over time, not straight away.
Have a look at the PEG ratio and EV/EBITDA for a few other ways to give you an idea of what you’re willing to pay for a company’s shares.
3. Setbacks are normal - deal with them
Jay Cutler had to settle for second place in Mr. Olympia behind Ronnie for four years before he finally took the top spot.
Resilience, as in investing, is everything.
You aren’t going to win them all - even the pros know that they’ll probably get just over half their initial decisions right.
It’s about how you deal with the setbacks that makes the eventual winners. Can you calmly assess whether a sudden share price drop is a sign to sell, or is it a time to top up your holding?
Emotional reactions are normal. But in these worlds, they can’t be allowed to cloud your judgement.
Take a step back, do your best to remain objective, and have another look at the valuation.
4. It’s not a boys’ club anymore
"Strength should be an attribute of all humanity. It's not a gift that belongs solely to the male of the species." says Jan Todd, competitive deadlifter.
Investing used to be something only the secretive echelons of old boys' clubs could do. And while the professional end of the industry still has a lot of work to do to get rid of that, we personal investors have never had it so good.
We all have access to earnings reports as companies release them and we don’t need to pay exorbitant fees to have someone do the maths for us.
The democratisation of market information means that being a member of that select group of men has mattered so little. So let’s make it count.
5. No time like the present
The best time to invest was 10 years ago, the second best time is today.
Starting now is especially important for the generations not set to benefit from gold-plated salary-for-life pensions (i.e. most likely you and me).
We have to put our money to work early, so it has the time to build that snowball effect later down the line.
Mattie Rogers, US Weightlifter and record holder, puts it best:
"There is no perfect time. No perfect opportunity. No perfect situation. No perfect moment. You either make it happen, or you don't. You don't wait for it to fall in your lap. You take it."
This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.
When you invest, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future results.
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