What Investors Can Learn from Racecar Drivers
Have you ever driven a car at high speeds around a racetrack?
I haven’t, but I have a friend who has done so many times, and there’s a great lesson he shared with me that I find incredibly useful for all of us in many other aspects of life including investing.
As he shared, your margin for error when driving around a racetrack decreases as your speed increases, so you must have a very definitive plan if something goes wrong. A critical strategy, as you will learn in a moment, is to always keep your eyes on your target, i.e. where you want to go.
That seems simple enough.
Inevitably, however, weather conditions and fuel spills create “tests” for all drivers. You’re humming along feeling confident on a straightaway when all of a sudden, as you head into a turn, you hit a fuel spill and your car spins out of control toward the wall.
What follows is what all inexperienced drivers do: they panic, their focus changes, and their eyes get locked in on the wall they’re trying to avoid.
When my friend experienced this for the first time, his instructor, who was seated next to him, simultaneously grabbed and turned my friend’s head while yelling “focus on where you want to go!”
Amazingly, when my friend snapped his head back and adjusted his focus in the direction of the path of the track, the car responded and he steered back into control and avoided any contact with the wall!
The lesson for my friend: when in danger, don’t stare at the wall you’re trying to avoid. Instead, remain focused on the track, i.e. where you want to go.
Guarded Confidence
So, why am I sharing this story with you?
Well, the path to strong investment planning, your long-term financial health, and a fulfilling life is littered with “fuel spills,” each of which has the potential to grab your attention, influence your mindset, change your focus, interrupt your long ingrained successful habits, and thus tarnish the outcomes you have worked so hard for and deserve.
If you have your eyes and ears open on any given day, you know how much more challenging this has become with 24/7 “news” on dozens of media outlets and devices.
The days of watching Walter Kronkite, often cited as “the most trusted man in America,” on the 6:00 p.m. news for your daily dose of information are over.
It seems as if everything today is “Breaking News,” and each dose carries with it the “potential” to interrupt your long ingrained successful habits and throw you off your carefully chartered course.
Essentially, you have two choices. You can do what Dan Sullivan of Strategic Coach has done. He made a conscious decision a few years ago to eliminate watching and consuming any news reporting on television. Instead, he’s a voracious reader.
His first observation: “it’s amazing how the number of crises in the world has dropped significantly over the last three years!”
As any objective yet focused observer can evaluate and conclude, the news media must strategically position and report events in an increasingly compelling manner in order to repeatedly capture our attention so they can attract profitable advertisers. However, each “crisis du jour” is reported as new and “different this time.”
Short of eliminating television completely, although a strict diet should be considered, your second choice is to vigilantly guard your confidence against all forces competing for your attention including all forms of media, and friends, family, and co-workers who may very well have conflicting mindsets and biases.
In many ways, our job as your financial advisor is very similar to the race car driving instructor. You won’t find us physically grabbing your head and turning it, but every time there is a “crisis” of some degree reported, we want to be there to help you quickly gain perspective, keep your focus on where you want to go, and what we believe is the strategic path with a high probability to get there.
Just like the positive outcome my friend experienced when he adjusted his focus away from the wall he was about to crash into and back to where he wanted to go, condition yourself to remain focused on the long-term outcome you want and watch all the good that can come as a result.
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Jack Phelps
Managing Partner / Financial Advisor