In the Long Run

The 123rd Boston Marathon was held this week. Can we learn something from this historic event?

2019 Boston Marathon. Photo: Doug Tengdin

Investing is a lot like running. We set goals, work towards those goals, adjust when we have setbacks, allocate precious resources — time, money, attention, knees – and eventually, see some kind of payoff. And there are some very special lessons that come from looking closely at an historic event like the Boston Marathon.

First, your goals are specific to you. I had a number of friends and relatives run in Boston this year. Someone asked me what place my friends finished. I had to think for a moment and look it up online. That’s not the way most people approach a marathon. Of course the elite runners are vying for the top spot. They also get special escorts and motorcades. But for almost everyone else, their personal goals are far more relevant than their finish order.

Elite women on Newton hill, 2019. Photo: Doug Tengdin

In the same way, we each have personal investment goals – for income, for growth of capital, for preserving a legacy, for funding college or retirement. It’s important to focus on our own goals, and not get distracted along the way.

Second, circumstances change. This year’s Marathon started in a downpour and finished in the rain as well, but in the middle, there was a lot of sun, warmer and more humid than most participants wanted. Runners need to have ways to deal with the variable conditions. In fact, Boston is famous for its volatile weather. Marathons have been held in snow squalls, in sweltering heat, in hail, strong winds, and other challenges. But in its 123-year history, the marathon has never been cancelled.

Similarly, investors need to be ready for variable conditions and unpredictable markets. In hindsight, everything seems obvious. But the path forward is never clear. Economies can have unexpected setbacks: wars (traditional, cyber, trade), famines, floods, political crises. We don’t know when we start out what circumstances will prevail when we finish. The only thing that’s certain is uncertainty.

Source: Wu, et. al.

Finally, infrastructure matters. There were over 33,000 runners this week and hundreds of thousands of spectators. Handling these kinds of crows – food, water, medical attention, warmth – is a massive undertaking. The Boston Athletic Association deserves a great deal of praise, as do the police, fire, and emergency services. It takes of lot of time, commitment, and technology to make sure everything works, and folks are safe. Likewise, markets don’t just happen. They need systems, backups, power, communications, clearing and settlement systems, ways to handle mishaps, and so on. Organizing competitions or clearing markets doesn’t make headlines, but it’s essential for making things work.

Effective investing is a lot like a marathon. Long-term results are never guaranteed. But if we’re faithful, plan well, and prepared, we should be able to meet our goals. Most of us will never run from Hopkinton to Commonwealth Ave. to finish in Back Bay. But we can be sure that our finances will go the distance.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2019-04-16T10:23:26+00:00April 16th, 2019|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

Leave A Comment