Running & Investing : Managing Fear

Million dollar question – How do we manage our fears?

The simple yet profound answer – feeling in control.

Running is 90 % mental sport, or so the saying goes.

A psychology consultant, Adrienne Langelier says “Running is probably one of the most difficult mental sports around.” “With other sports you have equipment that might come into play with your performance. With running, YOU are the equipment.”

Some of common fears that runners face:

  • Missing a PB (Personal Best)

  • Hitting the wall (Falling apart mid race or towards end)

  • Starting too fast

  • Unscheduled bio break

Runners should keep away from the negative areas and focus instead on the positives. Prepare to use your strengths and address your weaknesses.

One of the strategy which I intend to implement in Mumbai ’2019 full marathon is, break long goal to a smaller micro goals. I say to myself that I have to run 5 loops of 8 Km; the last 2 kms I treat as interval run because towards the end the euphoria kicks in and you give it all.

I say to myself that I have to run 5 loops of 8 Km; the last 2 kms I treat as interval run because towards the end the euphoria kicks in and you give it all.

The only way out is Train, Train , Train ! Runners spend 75-80% of time preparing for the race and 20-25% on implementing their training.

Runners spend 75-80% of time preparing for the race and 20-25% on implementing their training.

It’s all in the mind.

While investing many investors are unable to manage or control their intangible behavioural trait known as “FEAR”.

However while investing in equities as an asset class most of us are untrained or underprepared to handle market volatility. Immediate reaction to such times is FEAR.

This in spite of being aware of the fact that when you decided to invest, it was over a multiple year time frame and to further state there is no eminent cash flow requirement from your investment portfolio.

Immediate reaction to such times is FEAR.

This in spite of being aware of the fact that when you decided to invest, it was over a multiple year time frame and to further state there is no eminent cash flow requirement from your investment portfolio.

Even seasoned investors have been through these volatile periods & majority of them over the years have developed their ability to manage fear.

How in the world do we train for Equity Market Volatility ?

While I don’t have the perfect training plan, here are few pointers to start with:

  • Remember your PURPOSE of starting this investment, your GOAL. The purpose of investing is often forgotten during volatile markets. During such times REINFORCE the PURPOSE for which we are investing across multiple time horizons. This will help us to detach ourselves from temporary market volatility.

  • Minimize decision making points – pre decide when you will actually make a decision, i.e. create CASH FLOW BUCKETS. This way investments are bucketed as per goals and cash flow needs from these investments.

  • Have a “What if things go wrong” plan – Make an IPS (Investment Policy Statement)write down what you will do if your portfolio is down 20%,30%,40% and 50%.

  • REDUCE frequency of monitoring your portfolio.

  • To cut our fear, SHIFT FOCUS to other areas such as think about friends, family and other important things in life, for instance consider seeing a positive development in near future.

  • Develop mental ability to write down part of portfolio. Recently, I had an opportunity to meet an investor investing in equity market since last 20 yrs + with a CAGR (Compounded Annual Growth Rate) of above 20%. In 2008-09 period his portfolio was down by 70%. Equities held a major portion of his net worth apart from his property. He shared his philosophy of mentally counting ONLY 20% of his net worth, this philosophy helps him to tide over during volatile times.

There’s no standard therapy or training plan to overcome fear. One need to have their own way of developing mental strength. IPS, Mentally writing down a part of portfolio, to name a few will make us a lot more prepared and better positioned to tide over fear.

IPS, Mentally writing down a part of portfolio, to name a few will make us a lot more prepared and better positioned to tide over fear.

Always remember – The primary difference between a runner / investor reaching GOALS and the one who misses out is “HOW THEY MANAGE FEAR”

Content – Ajit Kaushal