A Runner’s Lesson for Investors

Some races end with the runners covered not only in sweat, but also in mud. Chris Hill recently ran one such race, and today, he shares a lesson he learned from a fellow runner and how it applies to stock investing.

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This video was recorded on Nov. 24, 2021.

Chris Hill: It’s Wednesday, Nov. 24. Welcome to Market Foolery. I’m Chris Hill. Just me today, recording a little early because I’m actually on the road to Boston, driving this year for Thanksgiving. In the Before Times, we would fly and rent a car to get around. But given all the discussions we’ve had about the airline industry over the past few months on this show, as well as the rental car industry, figured we’d just deal with the drive. If you’re traveling today, I hope it is going smoothly for all of us. Regardless of your Thanksgiving travel dates, I hope that’s going smooth. If you’re outside the United States, and it’s not your country’s tradition to celebrate Thanksgiving on Thursday with things like turkey, stuffing, mediocre NFL teams playing against each other, I hope you still enjoy a good meal in the company of others.

On Thursday morning, I’m going to be doing a 5K race with a few of my cousins. I’m packing some warm gear because the temperature is going to be in the 30s — because it’s Boston in late November. But this is going to be the last race I do this year. I do, however, want to tell you about a race I did a few weeks ago, because it does relate to stock investing. I ran a half marathon in Washington D.C. It was on this path that starts in Georgetown near the university of the same name, and it heads west toward Maryland. The path is not paved, it’s a dirt path. I’ve done a bunch of races over the past five, 10 years on this course. I like them in part because they’re just basic. There’s water stops along the way, but that’s it. There’s no food or music or cheering section — it’s very low frills. Again, it’s a dirt path.

I have run races on this course after we’ve had rain, and there are puddles here and there, but it’s not really a big deal. The path is about maybe 8 feet wide. So if there’s a puddle on the right side, you just move over to the left. Puddle on the left, you just sidestep to the right. You do, however, have to stay on the path, because for most of the course, there is nowhere else to go. On one side is a canal, and if you take a full step in that direction, you are going to be in the water. On the other side is an embankment, and if you go a step in that direction, you’re going to be rolling down a hill. So you’ve got to stay on the path.

Now, this particular half marathon took place after it had been raining in D.C. for more than 48 hours straight. We had about two and a half days of rain, and a few hours before the start of the race, it stopped. You can probably guess what the path was like after all that rain. Not only were there puddles, but for the first time ever, there were puddles that you could not avoid because they went across the entire path. There was no sidestepping these puddles, you just had to go through them. Now, when I do a race, I have my earbuds in, I’m listening to music, and my brain is, to put it charitably, incapable of deep thoughts. In fact, forget deep thoughts — my brain is incapable of connected thoughts. My brain is like Larry King’s newspaper column.

For those of you of a certain age, you know what I mean. For those of you who are under the age of 50, Larry King was a world-class interviewer, first on radio, then on television, and for about 20 years, he wrote a syndicated weekly column for newspapers. But unlike every other columnist, who has a single topic for the entire column, Larry King would just write a series of non sequiturs. It was just his thoughts about everything. It would be things like: Tom Hanks should get an Oscar nomination every year no matter what. The only thing better than Oreos is Oreos dunked in milk. Boy, they sure don’t make ’em like Frank Sinatra anymore. It would be like that for the entire column. I’m running a race, my brain is working like that, only I’m just looking at the scenery, and then the clouds, then noticing the shirts of other runners, whatever. It’s just a series of single thoughts. Couple of miles into the race, there were these two guys about 15 feet ahead of me. They were both wearing gray shirts, black shorts, and white socks. And I looked at them, particularly at their socks, and the thought that popped into my head was, “Those guys have mud on them.”

Later in the race, somewhere in the second half, a woman went past me on my left. I noticed the bright blue shirt she was wearing, and I look down at the white socks she was wearing and I thought to myself, “She has a lot of mud on her.” When I finally crossed the finish line, I bent over to catch my breath, and for the first time, I looked down at my own legs and feet. As you might imagine, there was a lot of mud. My shoes were covered. I was no longer wearing white socks. I was now wearing muddy socks that had little bits of white showing, and I just laughed at myself that at no point during the race did I put two and two together, and realize that what was happening to everyone else was happening to me too. One of the other runners that I’d noticed earlier in the race was a gentleman who had this thick shock of white hair. He was clearly older than me. If I had to guess, I would say he was easily in his late 60s, probably his early 70s. At some point after I crossed the finish line, he did too, and we ended up standing near one another over by this table that had water and Gatorade. We had the usual small talk that runners have after a race like, “Hey, good run,” “Congrats,” “How did you feel out there?”, that kind of thing. I said something like, “I’ve done this course a bunch of times, I’ve never seen a mess like that before.” He laughed and he said, “It was all that rain, but that’s OK, it’s the mud that makes us.” I thought about that for a second, and I asked him, “How do you mean?”

And he said, “That’s what makes us runners. Some people would rather go to a gym or a yoga class, and that’s OK. Exercise is good for you. People should get exercise however they want, but we’re out here, even with all that mess. We run the race, even with the mud.” I thought about that, and I nodded, said something like that, “I suppose it does wash away after a hot shower.” He said, “Right, always washes off. But the same for everyone, it’s the mud that makes us runners.”

He gave me a little wave, turned around, and he went on his way. So I walked to my car, which was about a half-mile away. To get there, I walked through a nice part of Georgetown, and sure enough, at one point, I saw a couple of people carrying yoga mats as they appeared to be on their way to a class of some sort. And on the drive home, I was thinking more about what this gentleman had said, and I realized that what he said applies not only to runners but to stock investors.

Because for us, mud is the red in our portfolio. It is the stocks that have taken a hit. Maybe they are down from their highs, or maybe they’re completely underwater. And just like running is not for everyone, neither is stock investing. Some people just want to buy an index fund and add to it over time — and by the way, that’s great. You can build financial independence that way, that’s great. Some people claim that they don’t have any mud at all. I’ve noticed this particularly on social media, and I’m sorry, but I don’t believe that for one second.

That would be like if after my race a few weeks ago, someone looking pristine from head to toe tried to tell me that they ran the same half marathon that I did. No one ran that race without mud. Any runner who says otherwise is lying. Just like anyone who tries to tell you they’re a stock investor and they’ve never had a stock go down is lying. And unfortunately, there’s a whole other group of people who are just out altogether. Maybe they bought one stock one time, it fell 20%, and they just didn’t have the stomach for it. They just couldn’t deal with the mud. But we’re stock investors. We signed up for this. And I am right there with you, by the way, I absolutely have mud in my portfolio. But this is why we diversify. This is why we build out our holdings. This is why we let our winners run. Because that is what washes away the mud. So don’t be afraid of it. This is what we signed up for. It’s the mud that makes us. Have a great Thanksgiving. See you on Monday.

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