Runners Make the Best Investors

Published by Graham on

I’ve been part of the running community for a long time now, actually, a very long time! I remember winning my first race in preschool, I think it was something like 300 feet in distance, my mom was impressed. But as you start looking past all the preschool medalists and start analyzing the serious and the well decorated performance runners you will notice that they all share a handful of common characteristics. And in my time as a financial advisor I have noticed those exact same characteristics being evident in most successful investors. But here’s the hook… runners always have those characteristics, and that’s something investors like us can learn from.

With a paltry 6.3% personal savings rate (which is below the 8.6% 70-year average) and most Americans woefully unprepared for retirement (66% of workers have less than $25k in retirement assets) I encourage all savers to pay attention.

Here’s what sets them apart:

  • Rigorous Preparation – competition level athletes are known for relentless consistency in their training. Just like runners who gear up before a race, the smart investor will do his research before committing his capital either to an investment or to a professional manager.
  • Discount Rate – Running doesn’t feel good. It’s not fun. But we do it anyway because we know that the results will be favorable in the end. The investor who invests her capital today for a comfortable tomorrow is identical in that she accepts the short-term pain in exchange for the long-term gain. In finance we call that a person’s discount rate.
  • Way of Life – To be a good runner one does not simply put in the miles and go home, he must consider nutrition, fluid intake, sleep, recovery, and injury prevention in addition to his daily training. Similarly, the successful investor lives his life in coordination with his financial objectives by making prudent purchase decisions and avoiding risk that could have him dipping into his investment portfolio before his financial plan dictates. This includes having an appropriate amount socked away as emergency savings.
  • Time Horizon – A runner trains specifically for the distance in which she plans to compete just like the investor who structures her portfolio to match her investment time horizon and risk tolerance (which is and should often be a direct function of time horizon). The investor with a long time horizon who invests in nothing but low risk assets is just as dumb as the marathoner who practices nothing but sprints.
  • Adaptable – Rain or shine, snow or sleet, the accomplished runner knows that he is required to finish his workouts on time and in time, no matter what, if he is to stay on top. Likewise, the accomplished investor knows not to abandon his investment strategy, regardless of current market conditions. He must adapt.
  • Discipline – This one may seem obvious but it has to be said, no strategy or training is of any value if the user is not disciplined enough to implement it fully and consistently. Without discipline the runner will remain slow and the investor poor.

Of course, there are non-runners who possess these virtues as well but I just can’t help notice how prevalent they are among runners. I guess those who are religious about self-inflicted restrictions end up well conditioned to apply the same concept universally, especially in cases of long-term self-benefiting activities like saving and investing. In either case, whether you are running or investing you’re not getting very far without personifying the short list above. As famed marathoner Becky Wade said, “In this endeavor, diligence and drive are not assets; they’re essentials.”

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Tim’s Top Links – 8/21/19 | Living With Money · August 21, 2019 at 2:28 pm

[…]  ‘Runners Make the Best Investors’ – Graham Miller – Rome Was Not Built in … […]

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