Marathoners vs. Investors: Different Race, Same Mistakes?

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Marathoners vs. Investors: Different Race, Same Mistakes? by Gerstein Fischer 

In just a few days, the New York City Marathon will be upon us, and as both running aficionados and investment practitioners, we tend to reflect on some of the similarities between running a marathon and long-term investing this time of year. In this post, I’d like to focus on three common mistakes made by both marathoners and investors, because I think the parallels are instructive.

Panicking After a Bad Workout

Every runner wants to stick to his or her training schedule, but what happens if you just had a really bad run in training or missed a workout? You might start to question your fitness or even whether your goal is attainable.  You might do something ill advised, like trying to make up the workout during your next session. Overtraining, however, may not help your performance at all. In fact, it may increase the possibility of injury and have a compounding effect on your upcoming workouts as well. A veteran marathoner would counsel runners to not increase their running distance more than 10% every week during training.

The same concept applies to investors, due to a behavioral phenomenon known as loss aversion. Investors tend to feel the pain of losses more sharply than they experience the pleasure of gains, which results in a tendency to overreact to market volatility. You’ve probably experienced times when volatility has made you anxious—maybe even so anxious as to question your long-term investment strategy. But I believe, it should never push you to abandon that strategy. In fact, just as a runner preparing to run a marathon is probably going to have a few bad workouts, the market will have its ups and downs. In fact, these swings are more common than many investors might think.

Exhibit 1 charts the experience of three hypothetical investors who begin 2007 with $1,000,000 invested in US stocks (as represented by the S&P 500 Index), yet take different actions in the ensuing years. Investor 1 stays calm in 2008 and 2009 and remains invested; investor 2 sells her portfolio after the crash in late 2008 and remains in cash for 12 months, then reinvests; and investor 3 sells his portfolio after the crash in late 2008 and never reinvests. The results in Exhibit 1 may not be as dramatic in all market cycles, however it does illustrate that one of the greatest long-term wealth hazards to investors is having no or minimal ownership in stocks when the market cycle turns up because they panicked, sold their equity holdings, and moved into cash when stocks were in a severe downturn.


Going Too Fast Too Quickly

There is no standard definition of how fast is too fast, but simply following the crowds instead of running your own race has become one of the most commonly seen mistakes made by marathon runners. “Start slow” is a rule that not only applies to your training but also applies to race day, and ideally your performance in the second half of the race should be better than in the first leg. As a marathon runner, your mission is to finish the race, not necessarily to come in first. Similarly, as an investor, you should resist the urge to “keep up with the Joneses” on a monthly or quarterly basis and instead keep your eye on the prize of your long-term goal. (That said, you may need to make some minor adjustments along the way based on changes in employment or other life events, as well as stick to a periodic rebalancing discipline.)

As shown in Exhibit 2, an investor should, like a marathoner, in a sense put blinders on to the “noise” in his periphery and focus on the end game: here, a 20-year time horizon rather than one-year rolling returns, which oscillate dramatically between strongly positive and negative returns. Focusing on longer time frames, like the entire marathon, leads to better planning, and hopefully more consistent results over an investor’s financial life.



Overlooking Proper Nutrition and Hydration

There are lots of factors that may affect a marathon runner’s performance on race day, as well as in the training period leading up to it. As you may know, consuming foods containing relatively high levels of carbohydrates during the run can help you keep your energy; so can consuming about 4-5 ounces of water after every five miles you complete. Many runners do eat and hydrate well during training but forget to stick to this plan on race day. They end up either running out of energy due to improper calorie intake or waiting until too late to drink and then drinking too much water—both of which will negatively impact performance.

It is a lesson that not only marathon runners, but also investors should learn from. As an investor, your investment strategy should be well-designed with your long-term investment goal in mind. You greatly enhance your chances of completing the long-term investment race successfully if you adhere to some basic investing hygiene: maintain adequate cash reserves, minimize debt and investment costs, apply tax-management techniques such as tax-loss harvesting each year. Remembering to do the basics can add huge value over the course of your investing lifetime.




A marathon is a long, grueling journey that is both physically and mentally challenging. It is typical for the marathoner to experience feelings of fatigue, hunger, thirst, pain, and even boredom along the way. Just as “understanding your body” is one of the many benefits you can gain through marathon training, “understanding your goal” is the key to a successful long-term investment strategy. And much as a marathoner who feels sick or in bad pain after the race probably should consult with a physician, investors may need a financial advisor to answer questions, address concerns, and provide sound counsel along the long road to long-term investment goals.

Good luck to all those running the NYC marathon this weekend!

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