“You have a goal, you have a vision for what you want to accomplish and then you define exactly what you have to do to accomplish that. That’s what I call the process”
A quote from Nick Saban, the head football coach at The University of Alabama on a recent podcast episode of Origins – which showcases the interworking’s of Nick Saban and what makes his teams so successful.
He then goes on to state:
“The most difficult thing though is you have to have the discipline to execute it every day, and this is where people probably struggle the most”
You have likely heard us use that word “discipline” often in regard to implementing a disciplined investment strategy. In fact we state on our Investment Strategy White Paper:
“Managing an investment portfolio is a process, not a one-time decision. At Financial Symmetry, we believe an effective investment strategy involves discipline, research and a defined process.”
Just as a national championship caliber college football team must adhere to a disciplined approach, we believe an investor needs to portray this same disciplined approach when managing their investments.
Particularly during market peaks or troughs, an investor’s ability to stay disciplined to their investment strategy is put to the test. As the Alabama football team has experienced success over the past decade under Nick Saban, investors have also experienced success since The Great Recession 9 years ago. Saban continues his interview stating:
“When you come off of a successful season, you don’t need this complacency, you don’t need this inability to focus on the things that helped you become successful. Complacency creates a blatant disregard for doing what’s right. All of a sudden, you’re not doing the right things, so therefore you’re creating good habits or bad habits, so by not doing the correct things you enhance the chances for creating bad habits, which in the long run affects performance, and all of a sudden you’re not playing at your full potential anymore.”
Investors can become complacent in their investment approach especially after the run up in the market after The Great Recession has seen double digit returns for the S&P 500 Index in 7 out of 9 years from 2009-2017. Another form of complacency could develop from behavioral finance components such as overconfidence or familiarity bias. Most commonly we see this through investing very heavily in the U.S. stock market as we are more familiar given our home country bias.
In order for an investor or a college football team to maintain their level of success, a haphazard approach will not suffice. A disciplined investment strategy must be in place to help you avoid making big mistakes that will sink your long-term goals and visions you have of your future self.
