The 3 Ways that Long Term Investing is a Lot Like Exercise

Long Term Investing

I’ve Been a Life-Long Exerciser

Ever since childhood, physical activity has been a part of my life.  As a kid, I played baseball in the summer, basketball in the winter and was a part of the volleyball team when my high school added that as a sport.

It continued in college with IM basketball, softball and racquetball and has carried through to adulthood with lots of walking and hiking with moderate levels of yoga and strength training and a sprinkling of running.

My family makes fun of me for my “micro-runs,” but research is proving that short runs are better for your health than longer runs, so I’m going to stick with it!

Bottom line – I’m far from a fitness nut, but keeping physically active is a major part of what keeps me out of the doctor’s office and feeling great when I get out of bed.

The other morning when I was on the treadmill, I started thinking about how the advice that I give to clients on long term investing strategies is a lot like the advice I’d give someone about long-term exercise.   The following are the 3 similarities I’ve observed as a financial advisor and long-term exerciser.

Similarity #1 – Sometimes it Stinks!

Everyone knows that exercise is good for you.  But let’s face it, sometimes it stinks!  For me, there’s nothing like one of those February mornings when the alarm goes off at 5:25 AM and my warm bed is beckoning me to hit Snooze and hibernate for another hour.  On those mornings, I’m often not feeling chipper as I stumble out of bed across a dark room and into the bathroom to put on my workout gear.

But, invariably, once I’m up and moving and getting my blood pumping, I end up feeling much better than if I’d surrendered to the siren song of my many layers of cozy sheets and blankets.

You also know that being a long-term investor in stocks also really stinks sometimes.  I know how I felt the first week of this year when the Dow cratered by 1,000 points in the first week.

At times like that, it can be very tempting to surrender to the siren song of “playing it safe” and jumping out of the market.  But, like exercise, staying with it will always pay off far more than putting up with the short-term discomfort.

Similarity #2 – Aggressive Short-Term Strategies Often Don’t Work

Going back to my childhood, I didn’t realize what a gift having a young body was for me.  I could take a few months off from regular exercise and then decide I was going to “get back in shape” and hammer it for a few months in the gym to get back to feeling like I wanted to feel.

Now that I’m firmly into my 40’s, I’ve had the experience of what physically overdoing can do, from trips to the chiropractor to months of recovery from “weekend warrior” activities, I’ve now learned my lesson that pacing myself is key.

Just like there are no “get fit quick” schemes, there are no “get rich quick” schemes for investors.   I learned some hard lessons early as investor thinking I was going to make a quick buck by pouring money into technology stocks late in 1999, only to realize in retrospect that I was jumping in at the height of the historic Tech Bubble that saw the Nasdaq lose 78% of its value in a span of 30 horrible months during the dotcom crash.

Choose tried and true long term investing strategies so you don’t hurt yourself in the process.

Similarity #3 – Diversification Matters

As I mentioned earlier, I have gravitated toward a mix of cardio exercise with yoga and some light work with free weights.  This helps me with endurance, flexibility and strength.  It’s important for me to have all three of these elements in my “fitness portfolio” instead of just one or two.

As a result, I’m ready for anything that life throws my way, whether it’s a wonderful hiking trip with my family to the Smokey Mountains, playing football in the yard with my daughter on weekends or performing in my daughters’ dance recital each year.

Similarly, it’s important to have a diversified investment portfolio that is ready for any opportunities or threats that the financial markets throw your way.  Some asset classes respond better in times of high inflation and some work well in periods of low inflation.  Some investments work well when interest rates are increasing and others outperform when rates are falling.  And at any one time across the globe, some countries are growing faster than others.

Mix up your investments just like you mix up your workouts so you’re prepared for any market situation!

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