The Loneliness of a Long-Term Investor

Every game in life is actually played on a 6-inch ground — the space between your two ears.

Martina Navratilova

Our lives are the sum total of the game we play between our ears. And that game never stops.

Should I read this? Do I watch that? Will I have another drink? Do I back that hot tip?
If so, with how much money?

Life is a continual process of inclusion and exclusion — some decisions being more important than others — that collectively influence our health, wealth, relationships, and overall well-being.

Our life experiences — good and bad — influence how we play the game of life. This continual process of learning is life’s way of helping us fine-tune our skills…so we can experience full, rich, and rewarding lives.

And what’s fulfilling to you might not suit others…but who cares? It’s your life you’re living, not theirs.

My approach to investing is not everyone’s cup of tea. That’s understandable. We all come to this game with different experiences.

The 1 October 2020 issue of The Gowdie Advisory provided members with an insight into how a lifelong passion has influenced my investment approach.

Here’s an edited extract:

In 1959, Alan Sillitoe wrote The Loneliness of the Long Distance Runner.

Sillitoe’s short story — about a juvenile offender who is afforded privileges in a youth detention centre due to his athletic prowess — was adapted to the big screen in 1962.

The byline in the film’s poster is:

“You can play it by the rules…or you can play it by ear — what counts is that you play it right for you.”

The Loneliness of The Long Distance Runner

Source: Wikipedia

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As someone who competed in their first cross-country at the age of 10, and has had a passion for distance running and endurance events ever since, the movie title resonates with me.

It can get lonely. However, it’s the solitude you crave. Time alone with your thoughts. Somewhere along the way, you unknowingly cross over from the conscious into the subconscious. Problems are solved. Ideas are created. Goals are given life.

Running plays an integral role in my investing approach. When you read so much material and listen to videos and podcasts, you need time away to think and process the information. What makes sense? Perhaps that needs a more in-depth look? Is that a valid option? Is it just another con dressed up in fancier clothes? Maybe there’s an opportunity there?

Put these questions into the conscious and invariably, the subconscious goes to work. Lessons from the past are recalled. A previous article or interview is remembered. The face of someone who might be able to assist comes to mind.

For me, the loneliness of the long-distance runner is entwined with the loneliness of being a passive long-term investor.

Every long-term investor must live by the creed of…“What counts is that you play it right for you.”

Wealth creation is an ultra-marathon. Not a sprint.

Too many people want to make money quickly. A minority succeeds. The majority fail. And, of those that do succeed, is the wealth retained for the long term or is the subconscious wired with an “easy come, easy go” attitude?

I’m not against making money quickly. But I recognise it’s more the exception than the rule. And when a windfall does come along, accept it as a win against the odds. Don’t think you’re smarter than the rest. Appreciate the good fortune you’ve been entrusted with. If you don’t, that fortune will pass through your hands for someone else to appreciate and/or enjoy.

The first rule in “playing it right for you”, is do not compare yourself with others.

Run your own race.

The failure to stick to a game plan is why investors invariably rush into the last “hot” investment…tech stocks, cryptos, property, etc.

As the pack goes past them, they get a rush of blood to the head and feel compelled to “sprint” to catch up. The sprint cannot last. The whole thing runs out of puff and collapses.

The steady-as-she-goes runner has the mental discipline to stick to the game plan. This was a lesson I learnt the hard way when I raced competitively in my youth. Get caught up in the moment. The roar of the crowd. The exhilaration of bursting clear of the pack. Then died in the back straight and had nothing in the tank for the finish.

Controlling emotions is crucial to running the best race you can.

What running has taught me is that you play the wealth creation and preservation game that’s right for you.

Each week I receive many emails — from readers of The Rum Rebellion, The Gowdie Letter, and members of The Gowdie Advisory.

My investing “game plan” resonates with some but not all readers. That’s fine.

The race I’m running is based on my ability, experience, stage of life, and acquired capital base.

The strategy is purposefully simple…it makes maintaining the discipline a whole lot easier.

The core tenets are…

  1. The vast majority of professional active managers do not outperform over the medium to long term.
  2. The investment industry is a marketing machine first and an asset management business second.
  3. I am a lousy stock picker.
  4. Buy low (when assets are undervalued) and sell high (when assets are overvalued).
  5. Keep transaction costs to a minimum.
  6. Understanding and assessing your downside means knowing what risks are embedded in the asset or investment fund.
  7. Every asset has to be benchmarked against the risk versus reward offered by cash…is the downside far more than the upside?
  8. Be patient and time your run.

My focus is on a narrow range of big picture assets…stock indices, REIT (real estate investment trusts), precious metals, and major currencies.

When the time is right, there will be more than enough returns on offer from these investment classes to achieve our goal of “winning by not losing”.

Which is why when people ask me about other investments…cryptos, individual property markets, option trading, etc…I have very little to offer. I do not spend time looking at them.

For me, they are a distraction I have neither the time or inclination for. These are not part of what counts in the way I want to play the long-term, wealth-creation game.

Knowing what to exclude is as important as what you include.

Accepting the loneliness that comes from a disciplined, patient, boring, and for a large part of the time, contrarian strategy can be a real challenge for people.

Which is why they fall prey to all sorts of promises for fast-tracked returns…promises that invariably propel them back towards the start rather than closer to the finish.

With markets going up and interest rates going down, it’s tempting to abandon a disciplined approach and look for that inside run. But I’ve looked and there isn’t one…or at least one that has an acceptable risk for the potential reward on offer.

From emails I received, I feel your loneliness and the concerns that come from this period of investing solitude.

But we are in good shape. Capital is intact. We are not wasting energy worrying about when markets might suddenly collapse. Gradually, we’ll make our way through the pack and be in a position to use our reserves to capitalise on the weakness of fatiguing markets.

Run your own race at your own pace and make sure that when you look back you can say…what counts is that you played it right for you.


Vern Gowdie Signature

Vern Gowdie,
Editor, The Rum Rebellion

PS: The Rum Rebellion is a fantastic place to start your investment journey. We talk about the big trends driving the Australian Economy. Learn all about it here.

Vern has been involved in financial planning since 1986.

In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.

His previous firm, Gowdie Financial Planning, was recognised in 2004, 2005, 2006 & 2007, by Independent Financial Adviser magazine as one of the top five financial planning firms in Australia.

In 2005, Vern commenced his writing career with the ‘Big Picture’ column for regional newspapers and was a commentator on financial matters for Prime Radio talkback.

In 2008, he sold his financial planning firm due to concerns about an impending economic downturn and the impact this would have on the investment industry.

In 2013, he joined Fat Tail Investment Research as editor of Gowdie Family Wealth. In 2015, his book The End of Australia sold over 20,000 copies and launched his second premium newsletter, The Gowdie Letter.

Vern has since published two other books, A Parents Gift of Knowledge, all about the passing of investing intelligence from father to daughter, and How Much Bull can Investors Bear, an expose on the investment industry’s smoke and mirrors.

His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors like you to protect their own and their family’s wealth.

Vern is Founder and Chairman of The Gowdie Advisory and The Gowdie Letter advisory service.

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