3 Things the U.S. Men’s Olympic Gymnastics Team Teaches Me About Investing
I watched the men’s team gymnastics event last night on TV. It was very interesting (and inspiring) to watch the U.S. medal. After all, no one expected the U.S. team to get a bronze — much less be in serious contention for the silver. And as I sat watching the team, a some things struck me about the team, and I thought about how they actually relate to investing.
1. Diversity is a good thing.
The members of the U.S. men’s Olympic gymnastics team each have different talents. Some are better at vault, and some are better with the high bars or parallel bars. Others excelled at the floor exercises. By including team members that have different talents, they were able to do well at overall, turning in a solid performance for the team.
The same is true of your investment portfolio. Diversity can help your overall portfolio turn in a solid performance. Consider ensuring that you have a healthy mix of stocks, funds and bonds, as well as domestic and and foreign investments.
2. Sometimes it pays to take risks.
The U.S. Men’s Olympic gymnastics team took a few risks. Justin Spring on the high bar comes to mind, as well as Jonathon Horton’s dismount from the high bar. These were risks calculated to maximize performances. Indeed, the risks that they took paid off with a bronze medal — accomplishing more than nearly anyone imagined.
When it comes to investing, a well thought out risk can be a good way to go. A new company that looks as though it might be the “next thing” or some other gutsy investing move (investing in a high risk market, like forex, for example) could actually result in higher earnings that you might have imagined.
(Of course, the flip side is that the risk may go badly. What if Spring had missed grabbing the bar? Then things could have turned ugly quickly. The same is true of your investment portfolio.)
3. Losses are part of the game.
At one point, the men’s U.S. Olympic gymnastics team was actually ahead. At another point, they were in serious contention for the silver medal. But it slipped away from them. A few mistakes — performances that weren’t quite up to par — added up to a bronze rather than a silver.
The same is true of your investment portfolio. You will sustain losses. Your performances may not be quite up to par. But, in the end, if your investment portfolio still manages a bronze, that’s no mean feat.
See pictures of the US men’s Olympic gymnastics team from the Los Angeles Times.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
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