THE marathon race is officially 26 miles 385 yards, or about 42 km. It is probably one of the most gruelling race. The current men’s record was set in September 2008 during the Berlin marathon with a time of 2 hours 3 minutes and 59 seconds or an average speed of more than 20km/hour! Most people cannot imagine this almost super human ability.
When the first runner crosses the line, the crowd goes wild, and all media attention is on him. Naturally the winner would celebrate the moment, as he continues with a slow jog, raising his arms upwards to wave to the cheering supporters. Some times, with his country flag flying high in his hands.
It isn’t only the fastest marathon runner who catches my attention. I am interested in all those who finish the marathon. And you’ll understand why if you too, have ever stood at the finishing line waiting for a friend or relative to complete the race.
Definitely, an interesting sight to behold – usually just before crossing the finishing line, the runner (whatever age, sex or nationality) would invariably raise his or her arms in a “V” shape, showing the universal sign for Victory. And that is regardless of how long the runner actually took! Why does each runner feel such a sense of victory even if they finish at the hundredth position? It is because their goal was simply to complete the marathon.
Achieving one’s goal is indeed a good enough reason to feel victorious. What is their secret for their strong resolution to hang on to the end? I have never completed one myself.
My brother-in-law who has completed a few marathons told me that despite the number of people running, it is actually a race that you run alone and at your own pace.
In the run-up to the actual race, you would have had some training, and learned valuable lessons about how fast to run, when to hydrate and what signs to look out for that might impede your progress.
On the actual day, you focus on the end point and must not be distracted by the person in front, or disheartened by an older person overtaking you, etc. More importantly, listen to your body and slow down if need be – but just don’t give up. Knowing your limitations and profile is a step closer to winning the race. It is the same for investments.
Most of us would probably not become billionaires nor have hundreds of millions when we retire. But it is possible for us to be millionaires by the time we retire. We just need to set our own realistic objectives and then run our own race. If I were to run a marathon, I would be glad to finish within 5 hours.
If we are too eager to grow our wealth, we may end up seeking higher and higher risks in order to make the pace.
It is like setting a target of finishing the marathon in 2-3 hours (unless you are already a world-class marathon runner). At some point, you may end up being over-extended because of the singular focus on speed of growth with total disregard to risks.
Almost like starting a marathon with a sprint, you are likely to collapse with stitches or lack of breath soon after!
Short term punts hoping to make quick gains are like sprints in a marathon, it can potentially be harmful and jeopardise the entire race. So when you invest for the long term, you should not ask what is the expected return in one year or less, you should be asking what is the expected returns in 3-5 years or even longer.
Short term investing plays on market volatility which is unpredictable, whereas long term investing relies on macro trends.
On the other hand, being too conservative is also not good. A marathon can technically be completed by just walking the whole way but you may take too long. Wealth too can grow by putting it into deposits or US treasury, but returns will be small and may not even beat inflation.
That said, deposits are good when there is a need for flight to safety during bad market conditions. Picking up the pace may be good, just like a conservative investor taking some risks to hasten the growth.
More critically, marathon requires endurance; so does investment. Stay the course and continue forward. It may rain or may be too sunny or the slopes may be too steep. Investing too has its kinks.
Disciplined investors continue to be invested. They may at times allocate more to cash and lower risks securities, and at times allocate more to higher risks asset classes, but they continue to be invested.
Just like a marathon runner adjusting the pace regularly to take into consideration his own well-being with the clear intention of completing the race. If we all run our own race and achieve our goals, we are all winners. Doesn’t matter that many people are ahead of you; there would probably be many people who are behind you too.
I believe in running my own investments marathon, at least I enjoy the journey and arrive at the finish line, victorious!
·Tay is senior vice-president and senior head of UOB’s personal financial services division
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