Hi, Today I am going to talk about some important Investing lessons which I learnt watching Netflix’s The Playbook: A Coach’s Rules for Life”.
The series showcases some of the most legendary coaches, their history, their motivations and their philosophies about their game and life. Since I love basketball, I got intrigued by Glenn Anton Rivers, aka “Doc”. Doc is an American basketball coach and former player who is the head coach for the Los Angeles Clippers of the NBA. In his more than 20 year of coaching and earlier as a pro basketball player, couple of things struck out, which I could correlate to Investing:
I hope you had a chance to listen to the 1st part of this series, today, I present the 2nd part:
- Move on – Doc’s mom always taught him to move on “Sprain an ankle, move on, you’ll be fine” “Loose a game, get up, just move on”. She never allowed Doc to feel bad for himself, i.e. get engaged in self-pity. This very attitude enables some of the best investors to move on. There will be losses, at times, big ones, especially when you have failed to anticipate some variables while making investment decisions. There could be periods of minimal returns or even losses in large time span, however, as long as the psychology and mind-frame is intact and is not distracted and disturbed by losses (either notional or actual), one wins ultimately. That is true not only in investing, but also in life.
- Pressure is a privilege -Rather than running away from pressure, Doc feels that, one should run towards it. You have earned to put yourself in a pressure situation, and you should feel privileged. You should embrace it.
It is ok to look foolish in the short term thereby get in a pressure zone because markets may not agree with you during those times. However, if you are confident of your investment thesis and have a long-term view, you may turn out to the winner ultimately.
Warren Buffett has demonstrated this multiple times, including during the 1999-2001 Dotcom bubble, wherein some of his peer money managers became billionaires overnight by investing in companies having .com behind their names based on number of clicks, while still incurring heavy losses and having no fundamentals.
The pressure to withstand excessive criticism when all are becoming rich very quickly on the side lines is what separates men from boys.
Warren prove his mettle back then and multiple times, thereafter, thereby enabling him to become one of the best money managers in history.
- Champions keep moving forward – In the penultimate NBA game, wherein the Celtics team was almost about to lose against the Lakers who were one of the most dominant teams at the time. However, they kept up at it and because of their inherent belief and sacrifice, they ultimately won the game and finally the championship.
As Morgan Housel of the Collaborative Fund has very aptly stated: “How long you stay invested for will likely be the single most important factor determining how well you do at investing. After all, if you as an investor get fickle minded by the volatility and oscillation of stock prices and trade continuously, you are poised to lose on most of the occasions. However, if you play the long-term game, chances of winning become very high.
Father of value investing, Benjamin Graham, explained this concept by suggesting that in the short run, the market is like a voting machine – tallying up which firms are popular and unpopular based on popular stories rather than fundamentals. But in the long run, the market is like a weighing machine – the market ultimately assesses the company based on fundamentals. What matters in the long run is the company’s actual underlying business performance and not the market participant’s fickle opinion about its prospects in the short run.
Hope you enjoyed listening to this!!
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Thanks!