2014 Q2 Newsletter
Ironman Investing
Most of you know I have been competing in Ironman Distance Triathlons consisting of a consecutive 2.4 mile swim, 112 mile bike ride, and 26.2 mile run since retiring from professional football. After more than a decade of training and competing in Ironman events around the world, this year I was awarded an entry slot to the Ironman World Championships in Kona, Hawaii on October 11th. The Kona Ironman is widely regarded as the world's most difficult race because of the intense heat, humidity, and winds that greet participants on the Big Island of Hawaii. As thrilled as I am to have this opportunity, I must admit that I am rather nervous about the enormity of the challenge that now lies ahead of me.
But what I love about the sport of triathlon is the inherent simplicity of the skills involved. Almost all of us know how to swim, ride a bike, and run. Contrary to popular belief, succeeding in Ironman is not all about developing speed, endurance, power, and race day execution. Yes, those variables are important, but no matter how well one prepares, completing an Ironman within the allotted seventeen hour time limit is impossible without first making the unwavering commitment to not stopping.
As simplistic as that sounds, 140.3 miles of swimming, biking, and running alongside two thousand other competitors in an ocean, across lava fields, and on scorching blacktop offers countless opportunities for bad things to happen. Leaky goggles, flat tires, upset stomachs, raging blisters, and severe dehydration are all very common occurrences during an Ironman event. Like little devils on the shoulder, each and every incident tempts participants to stop the pain, cut their losses, and throw in the towel. Success and failure constantly hinge on the Ironman's willingness to endure temporary discomfort in exchange for permanent long term gain. Only those who do not stop ultimately succeed.
Just as with triathlon, most investors have the skills required to deploy capital into a diversified portfolio of the World's Greatest Companies. Yet few have the discipline to rigidly adhere to a sound approach through a lifetime of investor temptations: under-diversification, over-diversification, euphoria, panic, leverage, speculation, etc. Unfortunately, succumbing to just one of these temptations can completely derail a lifetime financial plan. Only those who refuse to stop investing intelligently and those willing to endure temporary discomfort ultimately succeed.
After spending five years trying to convince investors to capitulate out of fear, the shoulder devils are now preying on investor's greed by trumpeting the market's record highs, skyrocketing technology stocks, IPOs, the natural gas boom, marijuana growers, and lucrative private equity deals. Through it all, our mantra remains unchanged: Plan Wisely, Invest Intelligently, Diversify Broadly, and Ignore the Noise. We refuse to stop investing intelligently; therefore we will succeed.
Don Davey
Senior Portfolio Manager
Disciplined Equity Management
Plan Appropriately, Invest Intelligently, Diversify Broadly, Ignore the Noise
