Investor: Should You Be In The Ring & Can You Tell That You Have Stepped In It!

Investors: Should You Be Getting In The Ring?

                                              by: Brendan Magee

Almost two years ago, I walked into a U.F.C gym and started taking the boxing and kickboxing classes. U.F.C. (Ultimate Fighting Champion) has grown in popularity along with stars like female champion Ronda Rousey. In the two years, I lost some things and gained a few things. I have lost about twenty pounds, gained some muscle mass, and and learned how to deliver a pretty good kick that produces a pretty loud thud when my shin hits the heavy bag. It's a grueling workout, and a great one for anyone looking to lose weight and get in better shape.

One  thing I haven't lost, though, is my mind. See at the gym there is a regulation size ring for those who would like to box and a cage for those who would like to participate in mixed martial arts. There was one  night where two of the gyms trainers put on a martial arts exhibition. The gym's owner told me that it was only going to be an exhibition, nothing too intense. Let me tell you something, in my eyes, intense wasn't the word. I do not know how these two guys were able to get up and walk out of the ring. They were jumping on each other, kicking each other, punching each other, etc. The ring was not the place to be unless you were thoroughly trained in mixed martial arts. I haven't and I know the ring is not where I belong.


Days like today and last Friday when the markets are in a reported free fall are days that the location of the ring gets a little hazy and investors can find themselves in a place they are not trained for. The market plunges a few hundred points. Investors go on the internet and look at their account balances starting to turn in a downward direction and its go time. "I got to get in there and save my my retirement." What does that usually mean?  "Get me out of the market! I don't care if we agreed this was a long-term process. I need to get to my corner and cover up for a while."

It can happen the other way as well. The market has gone on to record highs and "I can't miss out on this gold mine. Take me out of this diverisfied portfolio and load up on tech stocks, U.S. Large Company Stocks, etc. I know I said I believed in diversification, but this is different."

I know what boxing gloves are. I can even do a pretty good job of wrapping my hands so they don't get torn up by hitting the bag. I can do fifty sit ups in about two to three minutes. I can point out head gear and point out the padding that will protect the most sensitive of body parts, but that doesn't make me qualified to go in the ring and start mixing it up with another boxer, especially one who has been trained for a while.

There are those who are very knowledgeable about investing too. They know the difference between stocks and bonds. They know the difference between the Dow Jones Industrial Average and the S&P 500. They can read the Wall Street Journal without falling asleep. But that doesn't mean that they should be handling or managing their investments.

When I see an experienced boxer or kick boxer hit the bag and hear the thud it makes, I know that would hurt and hurt bad. When investors see stellar track records, hear about their friends brilliant investing exploits, or hear Jim Cramer brag about how he got it right that the market was going to crash, they don't necessarily feel how bad it is eventually going to feel when they step into the ring of investing and start breaking the rules of prudent investing.

In boxing matches at least their is a referee, who if they see enough blood, steps in and maybe stops the fight or gets the fighter some medical attention. Investing on your own there is no referee. The fight goes on until the investor says stop. Usually they don't stop until they have lost way more money than they bargained for and are left wondering how they are going to pick up the pieces.  

Investors need to be informed and be engaged in what ever process they are using to invest their money. They need to understand what is being done  and why. They should be able to explain it and feel in their gut that they have been the one determining how their money should be managed. They need to take ownership, but maybe they should not be the ones actually executing that process. The mind can very easily play subtle yet deadly tricks on an investor or boxer.

Joe Frazier fighting Muhamad Ali in Manila thought he could go out for the last round, but his trainer, Eddie Futch, knew that if he took one more shot to the head he could go blind or even die. Frazier after his fighting career was over thanked his trainer for looking after him and be able to walk away from boxing in one piece. Investors can get overly confident and say "I can do that. I don't need to be paying fees for that.Let me open my E Trade Account" Unfortunately, the ref isn't there to stop the fight from getting out of control. Stay out of the ring. Pay a few bucks to watch on pay per view. Your ribs, your money, and your family will thank you later.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to brendan@coachgee.com or call 610-446-4322.