Life Lessons From The Field: Know The Game You’re Playing
March 21, 2022
If you’ve ever played a sport—whether it was baseball, track, golf, or tennis—you know it can teach you a lot about life. Some of the lessons and skills you learn from playing a sport are pretty obvious—like teamwork, commitment, and grit—but there are other principles that apply to your financial world, too.
In this blog series, our team is sharing our Life Lessons from the Field and what they teach us about business, investing, financial planning, and other areas of life.
Know the Game You’re Playing
In any sport, it’s important to know your strengths. If you’re a tall, 300-pound man playing on a football team, you’re going to be a great offensive lineman, but you’d probably be a lousy running back—and that’s okay—that’s not your game. In baseball, there are players who “hit for average” who have incredible batting averages but don’t have a lot of power. Then there are other hitters who swing for the fences but strike out a lot. Both kinds of players can be valuable to a team, but each needs to play to their own strengths.
When it comes to investing, the same rule applies. Your opponents and teammates aren’t the market itself—they’re the millions of other investors—and most importantly, yourself. Realize that each investor is playing a slightly different game, and you need to know how to navigate yours accordingly.
If you’re building a retirement plan, looking at a 30-year time horizon, you’re playing a completely different game than someone who’s day trading. You have different goals, different strengths, and different metrics to measure. Consequently, your investment approach should be different.
Be the Thermostat, Not the Thermometer
This is something a lot of coaches tell their players, and the point is this: keep your cool, and don’t let other athletes or a change in circumstance get in your head. The best players—the “greats” who make history—are cool under pressure. They research their opponents, create a game plan, prepare for it, and stick to it, rather than letting the heat of the game dictate their behavior. They know what they need to do to succeed, and they stick to it.
When you identify your goals and develop a strategy (especially one that’s been tested and reviewed by a financial professional), it’s important to stick to that plan, even when things get heated. Making investment decisions in response to a volatile market or your emotions is the financial equivalent of taking a swing because the opponents are yelling, “Hey batter, batter.” It takes your mind off the game plan, throws you off track, and makes you more likely to miss.
Now, are there times when it makes sense to adjust your strategy? Of course—your situation and goals may change, and sometimes even a shift in the market warrants reallocating part of your portfolio. But those decisions should be made with careful consideration and planning, not because you’re worried about a sudden dip in the market. More often than not, patiently following your original game plan is how you’ll generate success.
“Everyone Has a Plan Until They Get Punched in the Mouth.” – Mike Tyson
Most people know the market will inevitably drop at some point during their investment lifetime. It’s one thing to say you can stomach a 30% loss during a good market environment; it’s another to watch your portfolio lose a third of its value in real time. Suddenly you want to “revisit” your strategy—even though that’s usually the worst time to do so.
Mike Tyson’s quote is a funny quip, but it’s true—it’s easy to say you’re prepared until you face adversity.
That’s why investing is all about recognizing which game you’re playing and keeping your cool. Our goal as advisors is to prepare our clients for a proverbial “punch in the mouth.” We know your short- and long-term goals, and we create a strategy to accomplish them. We do everything we can to create a strong foundation in the beginning so when that “punch” inevitably comes, your finances are prepared for it. We take time to do the proper research, allocate your assets according to your risk tolerance and goals, and help you determine when it’s prudent to buy and sell. And we do all of this so you can be confident about your outcomes no matter what’s happening in the market–which helps you avoid emotional decisions at inopportune times.
“Luck is What Happens When Preparation Meets Opportunity.” – Seneca
In sports, in finances, and in life, success comes down to knowing the game you’re playing, preparing for it, and keeping a level head when things get heated. All these things work together to prevent you from making a mistake just when you’re on the cusp of major growth. It’s why athletes and investors alike must have confidence in themselves and their plans—otherwise, you risk losing your cool, making emotional decisions, and missing out on big wins.
If you want to maximize your financial game plan (or just talk sports), we’d love to hear from you. You can schedule a consultation with one of our advisors here.