5 similarities between long-term investing and training for (and running) a marathon

By | April 2, 2018

Long term investing and training for (and running) a marathon have a lot in common. I have experiences in both front: I am a long-term investor for over 15 years and I am an active runner raced in 5K, 4M, 10K, 15K and Marathon races. With experiences from both activities, I noticed a lot common characteristics between these two groups.

1.       Both are Competitive

Long-term investing is a competitive sport. The score is the long-term investment performance. Ben Graham at the later part of his career was very rich and he has a lot of other interests outside of investing activities. However, one of the most goals he had in his personal investment activities was to enjoy the intellectual challenge and stay competitive.

Long distance running is naturally also a competitive sport where participants try to achieve their personal record, qualify for certain world-famous races etc.

2.       Both require extensive knowledge, patience and a little bit of luck

It is not a surprise that long term investing requires extensive knowledge, patience and a little bit luck. You need to understand the business that you are investing; you need to wait for the right moment for the right price to purchase or sell your interests; you, sometimes, need to be a little bit lucky to avoid pitfalls that can significantly set-back your entire portfolio performance. Charlie Munger used to say, “It’s better to be lucky than smart”.

When it comes to long distance running, however, you also need to accumulate extensive knowledge: know well about the physiology of the sports; know the science behind a training plan; know the optimal running form; know the efficient way for you. It also requires a lot of patience. If you are just a beginner having trouble running a 9-minute mile, you can’t expect to run your first marathon in 4 weeks to achieve a sub-3-hour result (equivalent to a 6’52”/mile pace). It takes lots of training to build your muscle and physical capability to achieve that level. If you lose your patience, you may get frustrated or injured. When you are training for long-distance running, you also need a little bit luck. Sometimes accidents happen, and a minor injury may set back your training for several days even weeks. And on the race day itself, a windy day can completely jeopardize your game plan (even you have trained in windy conditions)

3.       Both can be improved gradually along a long time

Nobody is born successful long-term investor. Same goes for the marathon champions. Both of these activities need years of investment into one’s own mind, body, mental endurance, stress handling etc. If you find the right methodology in investing, namely value investing, and patiently practice the craft by reading the 10-Ks and 10-Qs, reading and performing analysis, tracking companies, learning from the greatest investors and reflecting on your own investing framework, learning from past mistakes, you will slowly get better over time. This is an only certainty inside this work of dealing uncertainty. If you can buy a business worth $1 for 50 cents, you can count on that something good will happen. Over time, you can easily notice the improvement from relative performance against your benchmark over the years, or improvements in return on invested equity if you are managing a corporation.

Similarly, training for marathon requires tons of work to improve your game. It is day-in and day-out. It requires high volume of miles to be run each week (professional marathon runners typically run over 100 miles per week during their peak training days). And always human body will adapt and improve from your previous training and you can easily notice your improvements over time (measured by improvement in pace).

4.       Both have practically no end-point (you can always look for next goal)

When can you claim that you are the best investor in the world? I guess there is no such designation. Just like no one can declare that they are the No.1 runner in the world. Why? Because time is always rolling forward, and with every day passes by, there may someone who can do it better, and you can get better than your yesterday self. This is part of the fun in these two things: you can always do better.

5.       Both need careful risk management (to avoid the point of no return)

Investing involves lots of risks. If you are not careful, you may suffer permanent loss of principal. Charlie Munger’s favorite quote: “All I want to know is where I am going to die, so I will never go there”. As you become better in investing, you can identify those potholes and avoid them as much as possible. And when you eventually hit one trap, it is not bad enough that you can’t recover from your mistakes or misfortune. That’s the reason why it is recommended to use no financial leverage in investing in risky assets because you don’t want margin clerk to be able to force you sell your position just when you should really buy from value investing perspective.

Similar, in long distance running, you are carefully managing your risks as well. Although you should be perseverant and keep on pushing yourself to overcome hurdles, you need to be fully mindful that you don’t want to reach to a point of no return: major injuries. If you deal with small pain, your body can adapt back and becomes stronger. However, if you are not carefully managing the risk of injuring in a major way, you may be forced to stop training all together for multiple weeks and months to recover, in which case can set back your plan significantly.

What successful long-term investors and long-distance runner have in common?

  1. They typically are highly self-disciplined
  2. They are mostly competitive
  3. They are patient and methodical
  4. They are generally definite optimists that know what they want to achieve and are determined
  5. They are actively managing their risks (of investing or getting injured)

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