Lessons for the Stock Market from Snowboarding

Having just returned from a trip to Vail, Colorado for some beginner snowboarding lessons, I can’t help but make a few comparisons to another interest of mine: investing.

In snowboarding you fall a lot, and it hurts. All it takes is one downslope tumble and suddenly you are on your back with what feels like a keg of TNT exploding inside your skull. Having the wherewithal and grit to hop back up is important. Nobody wants to fall, but you have to go out expecting it to happen, and do what you can to minimize the probability of such occurrences.

Doing what seems contrary often works best. It can be scary to be rocketing down a hill, but losing control of your faculties is the real concern. As you point the board downhill you pick up speed. Your body instinctively leans back onto your back leg, your body thinks that this will slow you down, but that is patently false. All leaning back does is surrender any control you had to the slope, and now you really are in danger. When things seem scariest, your first plan is often the wrong one. What you really should be doing is leaning forward, into the speed, to retain control of your snowboard. This is the only way you can eventually turn the board and slow down, but it also runs contrary to what our body is telling us.

Our instincts are sometimes irrelevant to modern-day situations. The world has changed quite a bit in the last 10,000 years, yet our primal fears have not kept pace. Things like snowboarding and investing did not exist then. Hence what seems mechanically counter-intuitive on an emotional level is the intellectually correct choice.

It does make sense to quit at some point, to pump the brakes and unstrap our feet from the board. The big questions investors should ask are:

  1. How long is our slope?
  2. Where are we?

Most importantly, be prepared to fall and to get back up.


Author: secondhandstocks

The genesis for this blog stems from a Marine buddy and I came back from Afghanistan with more money than knowledge, and heedlessly tossed our hats into the stock market ring. A few months later, I remember discovering the classic book The Intelligent Investor by Graham and Dodd, and ravenously devouring my first introduction to value investing. That framework - with some generous additions by Seth Klarman, and Joel Greenblatt among others - guides my investment philosophy. I spent five years working in the intelligence field, both in the Marine Corps and then for a government agency after that. I speak Arabic and Pashto, have programming and analysis experience, and enjoy investing in technology companies as a hobby. I also spent a year on Wall Street working on a #1 Ranked Institutional Investor team, before deciding that that the Sell-Side was not for me.

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