Thursday’s Thoughts: A Response to Last Week’s Blog

A friend of mine, Brent Bunger, Co-Founder and President of Legacy Capital Group California, replied to last week’s Thursday’s Thoughts titled Practice, Practice, Practice with some real life application showing the importance of habit and routine.  Brent said, and I quote, “Great insight.  This is exactly what we try to accomplish with our investor clients.  Investors, to be successful, must have fundamentals to fall back on in times of duress or extreme euphoria.  Just as it is easy to establish that a normal person will likely be afraid when shot at or otherwise having their life threatened, it is equally true that a normal investor will be afraid when the markets are off 20% and talk of the end of the US economy is rampant…or euphoric and feeling more aggressive after enjoying big gains.  How we handle those situations is critical to success and how we react will be dictated by defining how we are going to react, our routine, before we are under pressure. “I like to call this performance psychology.  Athletes use this repeatedly.  It is why golfers have pre-shot routines.  They do the same thing they’ve done a thousand times before when under pressure so they don’t have to think—they react.  Good investors do the same.  When investors act out of cognition they typically fail.”

This response reminded me of a quote by great Hall-of-Fame Yankee catcher Yogi Berra, “Think? How the hell are you gonna think and hit at the same time?” It just goes to show the importance of habit and routine in your life.