There’s one more thing about riding a bike that can be counter-intuitive. You have to look down the trail, not right in front of your bike, to hold a good line. If you start staring at your front wheel, worrying about what rocks may be directly in front of you, you’ll be all over the place, winding back and forth across the trail, hitting every obstacle in sight.
You might remember this from learning to drive a car – you look down the road, not directly in front of you, and your car will go where you are looking. This is even more true on a mountain bike. Look down the trail at where you want to go, and you’ll go there. Get nervous about small obstacles directly in front of you and you’ll be in trouble. I can guarantee that if you stare at a rock coming up the trail, you’ll ride right into it. You have to look at where you want to go, not at what you’re worried about. When you focus on the obstacle immediately in front of you, you start steering. But to ride well, you can’t steer. You have to track the trail. If you start to steer, awkwardly swinging your wheel back and forth, you will lose momentum and slowly lose control. When you track, you’re looking down the trail, pointing the bike where it needs to go, and it goes. A glance at an obstacle will help you size it up, then get back to focusing on the destination.
As investors, we’re prone to staring at our front wheel instead of focusing on our long-term goals. We are blinded by the “obstacles” directly in front of us: rising interest rates, the end of Fed stimulus, another debt-ceiling debacle, US military action in Syria or a short-term correction in the stock market.. You can’t steer around these events. They are coming, and they will pass. Have we never had interest rates rise before? Have we never seen military action in the Middle East before? Have we never seen the market fall by 10% before? None of these things are new, and the next time they occur won’t be the last. We can’t allow ourselves to be distracted by these small obstacles in the trail. If we focus on these obstacles, and convince ourselves that we can avoid them through market timing, “tactical” allocation and stock trading, we’ll just get ourselves deeper into trouble.
We have to keep looking down the trail, tracking towards our long-term goals. We make small mid-course corrections by rebalancing our portfolios, but we cannot attempt to avoid the obstacles in our paths completely. Focusing on these events only increases the chances that we’ll crash right into them.
Bason Asset Management 