Market Pulse: Lessons from the Olympians
During the Olympics, CNBC tracks the stock market in the morning and shows curling in the afternoon. Which is more useful for investors? It may be curling. In fact, investors can learn a lot from watching the Olympians. Here are four traits that investors can learn from the athletes:
First, they don’t let setbacks derail them. Every athlete has setbacks … bad performances, injuries and poor decisions. The best athletes don’t dwell on what could have been. They look forward, learn from their mistakes and are motivated because of them. Investors, too, shouldn’t dwell on what they should have done and missed opportunities. A positive attitude leads to positive results.
Athletes are disciplined. They know what techniques work and they stick with them. Instead of just performing their sport, they constantly perform drills and spend time in the gym. The best investors are also disciplined. They stick with their approach rather than buying securities based on conversations with friends or what someone said on CNBC.
They invest for consistency instead of looking for the thrill of victory. When you trade options, hold penny stocks, or buy the strongest growth stocks you often experience the “thrill of victory,” and all too often the “agony of defeat.” That’s okay for a small “fun” portion of your portfolio, but the majority of your investments should be more stable, even boring investments. When you own industry leading high-quality stocks that pay dividends your long-term goals will be met and the next bull market will always make up for bad timing.
Athletes are also passionate about what they do. The best athletes love their sport and would participate in it even if there were no competitions. The best investors, too, are passionate about the markets. They read, research, and consistently follow the markets. Investing is a challenge (and how!). By the way, it’s also great fun.
Enjoy the Olympics. The games are fun to watch and may even be able to help your investment portfolio. Go Team USA!
David Vomund is an Incline Village-based fee-only money manager. Information is found at http://www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.