Running Your Own Race - Athletes to Investors
One of the most fascinating things for me over the 2024 Olympic Games, was the strategy that goes into races, especially endurance races. Whether it was running or cycling, it seemed that often the winner ended up being someone who lead it for a small amount of time.
Noah Lyles won the Men's 100m Dash by leading for what looked like a couple of centimetres at best, or about 0.02% of the race. Setting maybe the best example in quite some time that it doesn't matter how long you lead, as long as you lead at exactly the right time.
In the Men's Cycling Road Race, Remco Evenepoel of Belgium only lead for about 12% of the 272km race, staying in the middle of the pack for the majority of the race. But the 12% that he did lead came right at the end, leading him to the gold medal.
We saw similar results in the 5,000m and 10,000m races as well. The gold medal winner was often in the middle in the pack for the majority of the race, conserving their energy while waiting until the last lap or so to push themselves to victory. All while their competitors burned their energy at the front and fell back in the standings when it mattered most, when the eventual winner was making their push.
The gold medalist was able to stay calculated with their approach and stick to their strengths. It was okay if they trailed for up to 99.8% of the race, as long as they were where they wanted to be in the end. This is a lesson investors can take a lot of value from. The end goal should always be the goal, and shouldn't be risked for short-term position.
When someone is invested properly and in alignment with their long-term goals, often the worst thing they can do, is anything different. In its worst case, deviating from their plan can send them into a direction that's impossible to recover from. But there are distractions and temptations constantly around us. It's like running a race and seeing your competitors run past you.
Left unchecked, it creates an urgency within us to take action, often to take a different action. As a runner, one of the worst things you can do is run outside of your intended pace. Speeding up your pace drains you of energy and leaves you ending the race at a much slower pace. You're much better off running a steady speed throughout.
During the Olympics, we saw experienced athletes pace themselves at the edge of their comfort level before going all out to end the race. They performed better than those who exerted more energy early on by jumping ahead to an early lead. It didn't matter what others were doing, the medalists often ran their own race, knowing exactly what they needed to do, and executing it to perfection. As long as they stayed within a striking distance, it didn't matter what place they were in.
There's also the element of the race within the race. A country with multiple participants could use a strategy where someone leads the pack to tire out other competitors, allowing a fellow country-person to take control of the race before the end. A team earned medal in a sense. When to try to keep up with people, who you don't even know what game they're playing, it can't really lead to a desired outcome.
The best thing an investor can do is have a plan that is: designed to reach their desired outcome, built to endure, and is sustainable for them to maintain. When you know where you want to end up, and exactly what you need to do to get there, the speed of other people doesn't matter. Especially once you acknowledge that they aren't even headed in the same direction.
Outside of maybe your spouse, no one is going to have the exact same financial picture as you. We all have different goals, timelines, obligations, dreams, risk tolerances, priorities, and motivations. We can definitely have shared variables with other people, but even two people who want to retire at the same time will have completely different plans.
Investing for the long-term is a marathon. The Olympics has shown us that the winner isn't the one who leads for the longest, but at the right time. Being a long-term investor means that at any given time someone is getting richer than you – there will always a new hot stock tempting you. But data shows us that it's unsustainable, and the recipe for long-term success isn't taking on unnecessary risk in order to try to get the best returns in each and every year.
The recipe for success is much simpler: to get consistently good returns for a very long time. Hot stocks flame out quickly, often leaving its investors with very little. Just like an athlete running their own race, it's about finishing at your goal, there's no medal for who lead at the halfway point. If you want to win, you have to run your own race.
Keep doing things your future self will thank you for.
