Working in the financial advice space, I hear plenty of feedback from advisers on what clients and prospective clients are thinking. We have an investment philosophy, we do our best to educate clients about it, and to keep them on track.
It doesn’t always work.
And it shouldn’t be a surprise. Consider the time a person with a financial adviser spends engaged with their financial adviser and their message. Meetings, contact through phone or updates through email. It’s really a minuscule part of their life.
The time they’re exposed to friends, family, work colleagues, the media, social media, their bank, some random person on a plane. The likelihood of hearing about a hot new investment, a supposedly better way, or a disparaging remark, is high.
The potential is there to undermine the relationship. Though if it’s a good one, unlikely. The greater likelihood? The seed is planted about something else. Another asset class. Another way of doing things. I was reminded of this recently. ESPN released a two part documentary on Lance Armstrong. I’m not adding in any caveats about Armstrong. Most have an understanding of the general arc of his story and the end result.
However, I thought this clip was a great illustration of discipline and process. Or lack of discipline vs a philosophy.
"Lance, all you need is red cells."
Lance Armstrong describes the moment his physician introduced him to EPO. pic.twitter.com/owRFSbDxyw
— 30 for 30 (@30for30) May 25, 2020
“All you need is red cells.”
Again, this isn’t any defence of the process at hand. We all know it’s cheating, but to do anything successfully you need to have a philosophy and the discipline to follow that philosophy. Michele Ferrari was a doctor with extensive experience in sports physiology. He knew what was needed to improve performance on a bike and win a grand tour.
Armstrong was consulting with Ferrari, who was arguably the most knowledgeable on a subject, but still he was hearing about what others were doing. In the dirty world of cycling, Ferrari had distilled it down into a simple phrase.
“All you need is red cells.”
There’s your discipline. Armstrong followed. He won the Tour de France seven consecutive times. Then was later stripped of the titles. Ironically, it was Armstrong’s own lack discipline in another area that led to his downfall. Arrogance.
Yes, this seems a terrible analogy for investing. Using the world’s best known drug cheat. But it’s very simple. If you have an investment philosophy that works, the only thing required is the discipline to follow it. You will be tested. When the market’s down you’ll be questioning it: no one enjoys seeing their portfolio dip. When the market’s up you’ll be questioning it: exuberance will see someone else with an amazing result, without considering risk.
Heads will always turn. What’s needed is that simple phrase that can keep you on track.
Not sure what that phrase is yet.
This represents general information only. Before making any financial or investment decisions, I suggest you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs. Don’t make financial or investment decisions on the basis of blog post or sourcing advice from internet forums, if you’d like a introduction to investing, please consider reading Your Investment Philosophy, which offers an evidence based primer for building your own investment philosophy.
