Investor

The power of endurance – The Denver Post

My trainer Dan Sullivan likes to say, “Amateurs train until they succeed; professionals practice until they can’t go wrong. From athletics to engineering, medicine to money management, consistent practice is the secret sauce to victory.

Professional athletes always have a coach and insist on training. Their diets are planned, predictable and repeatable. They rely on training and tend to be much calmer with an emphasis on endurance and winning. They differ from amateurs who tend to train by pushing their limits. The mindset of an amateur is to maximize their limits and push them until they break. They live and die by the phrase “no pain, no gain”.

Steve Booren

When researchers examine the training schedules of Olympic-level cross-country skiers (some of the most focused, craziest athletes I’ve ever seen), they find something startling. These athletes train an average of some 860 hours a year (about two and a half hours a day). Their routines can be divided into three segments: anaerobic or high intensity, aerobic or modest intense effort, and low intensity, similar to a walk in the park.

The time spent in each of these areas is what is surprising. About 89% of their training time was spent at low intensity, 6% at moderate intensity, and about 5% at high intensity. Like professional runners, cyclists, rowers, and swimmers, most of their training time is spent in low-intensity practice. These professionals deliberately avoid pushing themselves to their limits or beyond.

Professional athletes understand that the best gym machines are designed for longevity rather than intensity. Rather than being temporarily tortured and potentially subjecting oneself to injury and mental exhaustion, low-intensity consistency is more beneficial.

As long-term investors, we can learn a lot from this approach. Stretching for the highest yields often leads to mistakes (injuries), failures (broken bones), and burnout. Looking back on my career, I remember countless “professionals” who were top dogs, until they weren’t. Where are they today? More often than not, even Google can’t find them.

Instead of looking for the highest yields, look for sustainable returns. A modest rate of return over an extended period far outweighs short-term hiccups. For many, the pre-retirement accumulation phase will last around 40 years, plus 30-35 years in retirement. That’s over 70 years of making your money work for you. Warren Buffett’s students understand this approach. More than 90% of his fortune has accumulated since his 65th birthday, nearly 27 years ago.

Capitalization is the return on investment linked to the power of time. Consistency over time is endurance, longevity, and the key element that handles all the heavy lifting. Stellar investment returns for a few years may sound enviable, but they often don’t have as much of an impact as decent returns over a long period of time. Consistency is again the secret sauce.

This consistency helps us work toward success not only in the long term, but also when temporary high-intensity moments force us to perform. High-intensity exercise all the time is poor preparation for when it’s needed most. This approach causes burnout and stress. Instead, prepare for those moments with volume and consistency. A single investment or part of your portfolio should not be enough to make it or break it. Remember that diversified, consistent and long-term investments can help you achieve long-term goals while reducing risk.

Over the past 10 years, many investors have hit the gym and started benching whatever they can manage. They continued to push their limits and are now suffering from injuries that have set them back. As a result, they feel the exhaustion and confusion that accompanies a change in what used to work and no longer works.

When investors seek the highest returns from their investments, we usually see the payoff. Whether it’s chasing asset gains, adding leverage, or trying to time the markets, they all tend to be caused by fear of missing out. Humans believe they are missing out on all these wonderful opportunities with prices reaching new highs all the time…only until the pattern stops repeating itself. It feels good until it doesn’t.

Like athletics, investing is a marathon, not a race. Ideally, you have the time and patience to let your money work for you for an extended period of time. By starting later in life, you have more ground to cover in less time. But don’t try to cover your lack of time with increased risk – it’s a recipe for disaster when you need it the least. Instead, try to save as much as possible. Save until it hurts. Increase the volume, not the intensity.

Your retirement will not depend on your ability to generate the best possible year or to beat an arbitrary index. Instead, your retirement will be built on consistency, repetition, and investment gains throughout your life. That’s what it takes to “bring the gold home”.

Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Intelligent Investing: Your Guide to a Growing Retirement Income”. He was named by Forbes as the 2021 State’s Top Wealth Advisor and 2021 Barron’s Top Advisor by State. This column is not intended to provide specific investment advice or recommendations.