Investment Lessons from my Training Crash

There’s a cycling joke that says that if you haven’t yet broken a bone then you haven’t ridden enough.  I guess I’ve ridden enough.  For those of you who have seen me recently in the office, you’ve noticed that I’m wearing an arm sling due to fracturing my collarbone in a recent bicycle training crash. But thanks to the doctors and nurses at UNC Health Care, I’m on the road to recovery and should be back to normal by summer.

For bike riders and other outdoor enthusiasts, injuries are one of those things that eventually happen to us.  They are inherent risks that we must accept if we wish to enjoy our favorite outdoor hobbies.  And so it is with investing. If you haven’t suffered a significant downturn in your portfolio then you haven’t been an investor long enough.  There are things we can do to reduce our risk, like holding a diversified portfolio, selecting a mix of assets that we can live with in good times and bad, and thinking long term, but we can’t eliminate risk entirely.

There’s no question that it has been a rough year or two in the equity markets, but downturns and bad periods are part of the investment landscape.  Bad performance always makes us wonder if we should continue to invest.  Some people, including my wife and kids, have asked me if I’m going to ride again.  I can’t say with absolute certainty, but I’m 99% positive that I’m going to go back to riding and racing once my body lets me.  I don’t want to give up something that makes me feel like a kid, reduces my stress, improves my health, and probably makes me a better person.  Regardless of what I do on the fitness side of things, I know what I should do on the investment side: stay invested so that I can give my portfolio a chance to grow over time and help me reach my long term goals.  Trying to jump in and out of the market or simply waiting until things get better is very likely to compromise my chances of meeting my objectives.

You shouldn’t avoid investing because something bad might happen.  History has shown that bad things will happen.  It comes down to knowing the risks, accepting the risks, and plotting your course.  And, sticking with things, even during bad periods, and especially when it doesn’t feel like you should.