Stock Markets and the Marathon
“What do the markets have to do with a marathon?” – I am sure the question is already in your mind. Let us get to the answer by understanding the question better.
Over to the marathon first – The marathon got its name from the famous run of Pheidippides, who carried the winning message in the great war of Marathon to Athens. He ran non-stop, delivered the message ‘We won’ and dropped dead or so goes the tale. The marathon has been a constant in every Olympics right from 1896. Today, the marathon has grown way beyond being an Olympic event. Every great city of the world has its own marathon and the event celebrates the spirit of the city, the culture of its people and is a grand celebration. These events have made marathon running into a passion for people across age, gender and class. Participation has also become a reality test of the endurance levels of body and mind.
This ultimate test of endurance has seen several amazing participants. An old man of 100 years Fauza Singh and a little 3 year old Budhia Singh exemplify the spirit of this race and the pursuit of excellence though endurance. Most participants do not run a marathon to win. They run in order to finish. And those who finish are all treated as winners in spirit. Running a Marathon is no joke. Training is intense and runners learn to progressively manage the distance.
The preparation for a marathon is a progression. Often, people who aspire to run a marathon are those who haven’t even run in years. Yet they venture with the spirit of doing the impossible and enjoy the progression. Small steps lead them onto bigger things. The approach is to build oneself mentally and physically. First, they take on 5 km and learn to run the course. They run with a weekly plan and gradually expand the distance they cover at one go. They prepare themselves mentally and physically as they grow their distance. Once a marathon runner confidently does his distance without the fear of stopping short, he then shifts his attention to the time. After ensuring you will finish, it is time to see how soon you can.
Investing in the stock markets is a race that is only too similar to the marathon – a distinctly long distance race. There is no escape from this race and every one of us needs to run it. We need to focus upon how we run this race.
What most of us do is measure ourselves time and again over the short distance.
We keep trying to do the shorter distance faster. In other words, we measure how we are performing over shorter time lines. This leads to excessive performance anxiety in the short term and often makes one to quit the race after doing a short distance. We simply run out of gas by doing too much in too short a timeframe.
Excessive focus upon short term performance is not how a long distance race ought to be run. When we focus upon shorter distances, we tend to overlook the big picture of how we should stay the course and complete the long distance race. The whole game is about staying the course and within reasonable earshot of the leading pack. Few investors run the investment race like a marathon. Why?
The reasons are not too difficult. Most investors venture into the stock markets with little or no previous experience, preparation or idea. Investors want to take the journey to wealth and the stock markets seem to be the best road to take. An investor must understand that the road to wealth should also be run like a marathon.
Preparation should be meticulous and precise. To run the stock market marathon, one must build himself mentally and financially. Firstly, you must believe in the stock markets and in your own ability to weather its tough course. If you only believe in the power of hope and prayer, it is only wishful thinking that the markets will do well for you. Then you aren’t sure about your own conviction and will probably chicken out of the markets exactly when you must not. Building conviction is like adding mental muscles and toning up your mind. You understand the risks and the opportunity on hand clearly. Then you mentally figure out the worst case scenarios. You understand how bad things can get and work out how you will respond. A marathon runner needs a well-toned up body. An investor needs a well-toned up mind. Financial preparation is equally important and should be built gradually by undertaking incremental investment steps. Building an investment corpus through regular, disciplined savings helps you assemble the capital that you need for stock market investing. As you build this corpus, you also learn what not to do by keenly observing the market behavior and investor responses. The money that you are building into a corpus continues to earn stable, fixed returns in bank deposits or fixed investment plans. During this phase when money is being built into a corpus your conviction must be strengthened and built up. By the time you continue to achieve the twin objectives of mental and financial readiness, you will be ready to run the marathon on the road to wealth. The actual race will go off well only when the preparation is precise and perseverant. The limited few who follow these two aspects and are well prepared end up winning. Striking gold or finishing well is only a matter of time. The road to wealth is very much a marathon.
Chief ideator and founder