I consider swimming a life skill, much like investing. Swimming helps in the shaping of the whole body and not just some parts of it and that too with minimal injury. I read this somewhere, ‘Water functions as the perfect body “protector” and, at the same time, a great muscle enhancer’ and thought it was such a lovely way of putting it across. In fact, in many injury cases, swimming is recommended as a recovery exercise.
Investing too shapes your whole life and your investment process both protects and enhances your life.
Now why am I talking about swimming here in an investment blog. Firstly, just like the investment journey, swimming is an individual sport. It’s a sport that tests your endurance, strength and flexibility, as does your investments. Lastly, whilst in a swim race you are competing with others, the main objective is bettering your time. Investing too is a personal journey, your objective is to maximise or optimise your investments.
Similar to other sporting activities, you can swim anywhere, pool, pond, lake, river, or sea. However, there are major differences between swimming in a pool and open water swimming, be it lake, river or sea.
You need to understand the differences before you jump into any open water for swimming.
In a pool, you know the length, depth, general temperature and other conditions. While pools are nearly always consistent in their conditions, from the depth to the temperature, the ocean can change greatly from day to day – and even from one minute to the next. The tide and weather conditions mean the ocean is forever changing, and therefore you should never become complacent and assume you “know” a certain beach.
Investing in equity is like pretty much like swimming in open water. There is constant movement of waves, tides, currents, all out of your control. What is in your control is your behaviour and skill in the open water swimming.
The most important skill in Open Water Swimming (apart from the swimming itself) is to be adaptable. Strong open-water swimmers have the ability to change their stroke depending on the conditions – for example, a change in current, being hit by a wave or if they are swimming alongside someone.
Secondly even the most seasoned swimmers can freak out at the slightest trigger in the open water, so next important skill is to keep calm in the sea. Don’t let panic takeover and drown you.
Investing in equity also requires you to be adaptable, by that I mean a portfolio with an appropriate asset allocation based on your risk-taking ability. And the same needs to be rebalanced or course corrected as and when required based on the market movements.
Similarly, when the markets are choppy, rather than panic and let irrational fears take over, just stay calm. Make a conscious attempt to stay away from the noise. Just let the tidal wave pass over before you take any decision regarding your investments.
Don’t worry if it takes a few swims to get that control, things will start to fall into place with practice.