Foolish investing, like “Modern Olympism,” is a philosophy seeking to create “a way of life based on the joy found in effort, the educational value of good example and respect for universal fundamental ethical principles.” Here are five lessons to be learned from watching Olympians at work as we strive for investing gold.
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The Olympic Charter describes "Modern Olympism" as a philosophy seeking to create "a way of life based on the joy found in effort, the educational value of good example, and respect for universal fundamental ethical principles." Sounds pretty similar to Foolish investing.
As we strive for investing gold, here are five lessons to be learned from watching Olympians at work.
1. Gold medals aren't won overnight
Whether you pursue Olympic gold or golden investing returns, success won't happen instantly. Reaching any goal takes education, practice, perseverance, and overcoming obstacles. It's nearly impossible to grow a million-dollar portfolio in a year or two. However, if you adhere to the Olympic philosophy above, that goal could be quite realistic over an extended period of time.
Australian gymnast Allana Slater, who suffered from sleep apnea as a baby, began gymnastics before her second birthday to improve her health. Fourteen years later, through perseverance and hard work, Allana is the Australian national gymnastics champ. Her focused pursuit of her goals helped overcome all obstacles, including the death of her father in a 1997 plane crash.
2. There's always another chance
Many investors hear about a hot new company, and pounce on the opportunity to buy it before they have time for adequate research. They fear that the window of opportunity will forever close if they don't act immediately.
For investors planning to buy and hold companies for the long-term, what's the rush? Opportunity always finds its way back. Stock prices don't rise to the top in one fell swoop. Even the best companies miss earnings in different quarters, or are affected by short-term market corrections. There's always another chance.
Just ask U.S. platform diver David Pichler, who was struck down by a stomach ailment the night before the 1992 Olympic diving trials and didn't make the team. "Things happen for a reason and you have your time," he says. David is now competing in the individual platform event, and insists that this time he's "accepting nothing less than a medal."
3. Don't try too hard
Hard work can pave the way for successful investing returns, but obsessing about your investments at the expense of the rest of your life is harmful.
If you find yourself glued to the TV watching financial shows at all hours, or checking your portfolio every 15 minutes, you may be trying too hard and spending your time in ways that won't be productive to your investing career over the long run. To say nothing of your social life in the short term.
Investing in the Foolish Four or an index fund takes very little time and needs to be tracked just a few times a year. If you'd like to venture into buying individual stocks, increase your weekly time commitment. Unless you plan to be a full-time day-trader (and risk becoming one of the 90% who lose money), you can build a portfolio within the confines of however many hours per week you choose to dedicate.
Swimmer Jenny Thompson put a lot of pressure on herself to win an individual gold medal. "I think I tried a little too hard," Jenny lamented after her defeat. "I just tightened up in the end."
According to her coach, Richard Quick, "Jenny made the choice before the race started to try to win the gold medal. She wasn't striving for silver or bronze. In order to do that, she went out very fast."
By trying too hard to pursue the gold instead of focusing on swimming for speed and endurance, Jenny lost the opportunity to bring home any kind of medal.
As an investor, silver or bronze returns over the long-term will be very satisfactory for retirement. Don't burn out by chasing 100% annual returns, when 11% is the S&P's long-term average.
4. Never give up
No matter the short-term direction of the market, or how frustrated you feel with your investments, never give up. You may need to increase your research skills, or better understand the mechanics of a mechanical investing approach -- but giving up deprives you of the opportunity to learn from your mistakes.
Baseball Olympian Mike Neill spent the past 9 years in the minor leagues, but he never gave up dreaming of one outstanding success. Neill claimed his victory by hitting the home run that won the longest game in Olympic history, and beating Japan's best pitcher.
5. Enjoy your success
What good is all your hard work if you can't enjoy yourself? Investing should be fun!
It's no great joy to watch the market slump 100 points daily. But, anyone who's had even a few years of investing experience knows it can rise just as quickly.
Take the lead from America's Davey Hearn, who competes in single canoe. He spent most of his life as the second greatest whitewater paddler in history. A member of the U.S. National team since age 16, the 41-year old didn't want to get out of his canoe at this year's Olympics, since it may be his last. He simply wanted to savor the joy of being an Olympian.
No matter that he wound up 12th among 12. He enjoyed simply being there.
Enjoy having the brains, money, and desire to invest. When your portfolio has reached its goals, stand atop a chair and have a friend sing your national anthem.