Run In Your Own Investing Lane

Investments have to be tailor-made to one's liabilities, goals and cashflow requirements. Two people of the same age and identical salaries can't have the same investment strategy

- By LARISSA FERNAND

Recently, a very well-known and respected investor magnanimously gave me some investing advice that did not resonate with my situation. To this, a friend of mine said: “You can’t take advice from someone who is so fabulously rich that he can never comprehend the nuances of your situation or your insecurities.” That hit home. My friend is a financial advisor and knows how to adapt his advice based on an individual's situation. It made me realise that all investors are not good advisors; and it also made me realise something very important: as investors, we share the identical field (market), but are playing starkly different games, and in completely different leagues.

Consider running, for instance. A sprinter will focus on developing fast-twitch muscle fibres using plyometric exercises and strength training. The focus is on improving speed, strength and power. Marathoners, on the other hand, focus on developing cardiorespiratory fitness, muscular endurance and stamina. Sprinters also have perfect timing and immense power, and can switch on a burst of acceleration over a short distance. However, the sprinter’s attribute of pure power entailing plenty of fast-twitch muscle becomes a liability in the mountains. For mountain climbers, it is the power-to-weight ratio. They invariably have a birdlike frame, are mentally very tough and have immense stamina. Unfortunately, mountain climbers can’t sprint with the best.

Let's take the example of tennis. If a tennis player wanted to develop a forehand on the run, she could isolate this movement by being hand-fed one challenging wide ball at a time—which would require her to move explosively towards it and attempt to hit it with substantial power. Once power and explosiveness are consolidated to a higher degree, then the player can focus on accuracy. Even within a sport, a player may require a change in training to develop specific skills.