Going Swimmingly

Michael Phelps’ performance was amazing. The Olympian overcame a childhood fear of the water and the scorn of adolescent peers to win more gold medals than any person in history.

Often in investing we have to confront our fears and do what is unpopular. In fact, what’s ultimately most profitable rarely feels comfortable at the time. And what’s comfortable rarely ends up profitable. It’s like our brains are wired for failure.

This is part of the reason investing is so hard. Many adaptive instincts and feelings we get are a great help to us as we perform essential tasks. For example, our innate ability to recognize and extrapolate patterns is an essential language-learning skill. But it often leads us to see “pictures in the clouds” when we look at stock price behavior.

Some researchers recently noted that Michael Phelps’ victorious fist-pumping is another innate behavior. By taking uncomfortable, unpopular investment positions, we can all hope earn the right to express ourselves in the same fashion.

Douglas R. Tengdin, CFA
Chief Investment Officer
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