This weekend, the International Association of Ultrarunners 24-hour World Championships is taking place in Turin. Two of my colleagues are competing for the Great Britain & Northern Ireland team. Running as far as one can in 24 hours is beyond my comprehension but it did make me think that comparisons can be drawn between ultra-marathon running and investing.
Marco Consani and Fionna Ross qualified for the team by running 248km and 233km respectively in 24 hours. Their achievements act as an excellent reminder to the importance of good preparation and having a long-term perspective – strategies that can also be applied to investing.
Good preparation is key to both running and investing.
Good preparation is key to both running and investing. Years of training go into running such long distances. Meticulously tracking and improving performance are key factors in succeeding in such a challenging and competitive event. Much like athletes, investors should undertook huge amount of preparation – in the form of research – before investing.
Experienced runners such as Fionna and Marco know that keeping a steady pace throughout the race is vital to their success. Any small advantage gained from sprinting will be offset by using up too much of their limited energy supply when running such great distances. Similarly, short-termism in markets could result in temporary gains but these may not be sustainable. In the long-term, however, fundamental strengths will shine through.
Short-term investors will often shift their portfolio in line with changing markets chasing returns; leading to high turnover of stock and increased costs which act as a drag on returns to shareholders. Historically, it has proven to be extremely difficult to accurately predict market timing. By focusing on the long-term, investors can avoid the higher costs of constantly shifting portfolios and the idiosyncrasies of markets.
There are a surprising number of parallels between Fionna and Marco’s approach to winning ultra-marathons and long-term investing. Their rigorous training regime and ability to overcome potential obstacles during a race are also attributes that are central to successful long-term investing.
Who would have thought that ultra–marathon running and long-term investing would have so much in common?