Photo: Paul Warrander. Source: Wikipedia
People can argue about whether success is due to luck or skill. But often it seems to come from somewhere else. Notably, a person’s performance in many areas come from a special blend of passion and persistence—grit.
Every year, Roxbury Preparatory Academy in Boston has a Pi Recitation Contest: 6th, 7th, and 8th-grade students stand at the front of the room and recite from memory as many digits of the number pi as they can. The winner gets to “pie” the school’s principal—usually after reciting well over 100 digits.
Pi-day is just one of dozens of ways the school—a public charter school comprised almost entirely of low-income minority students—encourages persistence and perseverance. The school wants its students to do hard things, to understand that effort determines success. And the approach seems to be working. Over 60% of students that attend the Dorchester, Massachusetts middle school go on to college.
Investors need grit. On any given day, the market can go up or down. Most years, the market will go down at least 10%. Sometimes this happens more than once a year. Chances are, we will see another 50% decline in the overall stock market at some point. What should we do? We can learn from students at Roxbury Prep, who have a Powerful Speaking Extravaganza every year where they perform a monologue from Shakespeare or other major works. If they forget something or get stuck, other students encourage them to restart a line and keep going.
Global Stock Market. Source: Bloomberg
Having a trauma-free life can be bad for our health, financially and otherwise. If we never taste the bitterness of defeat, we’re not ready when bad news arrives. Grit is the ability to get up again when something knocks us down.
Douglas R. Tengdin, CFA
Chief Investment Officer