This weekend I had a… little mishap on the bike.
It was just a little spill (up and over the handlebars) and I landed poorly. The irony of it all is that it happened on the stairs on the trail that I recently wrote about. And it happened because I did the exact opposite of what I knew I should do. And now I can’t stop thinking about this analogy between mountain biking and investing. Three things and I would have ridden through cleanly and wouldn’t be off the bike for three weeks now:
1) History. I’ve ridden the section before. I rode it just a few weeks ago. It didn’t change. But somewhere, in the back of my mind, I heard an investor’s four most dangerous words: “It’s different this time.” And I forgot history. It’s not different. The trail hadn’t changed, my bike hadn’t changed. As investors, this may be our most important lesson: it’s not different this time. Pay attention to history, and don’t forget it.
2) Commitment. As I approached the last few stairs, I wavered. I waffled between bailing early and riding down the drops. I tried to make a last-second decision instead of having a plan and sticking to it. If I had committed to riding the obstacle, I’d be typing twice as fast right now. So take a lesson from me: develop an investment policy. Write it down. And commit to it. When the going gets rough and rocky, remember what you had planned from the beginning. Commit.
3) A guide. If I was riding with somebody, I likely would have taken the trail full-on, with confidence, and come out the other side smiling. Riding with other people pushes you, makes you stronger and a better rider. In investing, having a coach or advisor can steady your nerves. They can help you remember to commit to your plan, to not get scared when volatility hits the markets, and stay focused on long-term goals.
Bason Asset Management 