In light of the upcoming March Madness that will soon take over the sports world, Dave Butler, a vice president at Dimensional, explains the power of routine in responding to pressure and offers a sports-related example to help investors apply discipline in a stressful market.
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"The same lessons apply to the seasoned investor. A chaotic market is akin to what the visiting team experiences in a gym, where opposing fans and players are doing everything possible to distract you. You stay focused on a routine burned into your nature through coaching and repetitive practice.
The components of the seasoned investor’s routine are similar: the investment policy statement, the regular review of family goals and liquidity needs, and the regular calls an advisor makes during good and bad markets. These and other actions are all part of the process developed to summon that muscle memory needed in stressful times. Just as the great athlete navigates through the moments of pressure in any athletic event, the actions are part of the routine that allows the individual to navigate through a chaotic market like we have today. "
As a lifelong player and fan of basketball, this metaphor couldn't be more true. The routine can be attributed to the process that you take when investing. Focusing on the "routine" in this case will help you maintain your discipline during volatile markets. As you can imagine, your advisor is your coach and will help you stay disciplined during these times.
The components of the seasoned investor’s routine are similar: the investment policy statement, the regular review of family goals and liquidity needs, and the regular calls an advisor makes during good and bad markets. These and other actions are all part of the process developed to summon that muscle memory needed in stressful times. Just as the great athlete navigates through the moments of pressure in any athletic event, the actions are part of the routine that allows the individual to navigate through a chaotic market like we have today. "
As a lifelong player and fan of basketball, this metaphor couldn't be more true. The routine can be attributed to the process that you take when investing. Focusing on the "routine" in this case will help you maintain your discipline during volatile markets. As you can imagine, your advisor is your coach and will help you stay disciplined during these times.
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