You don’t have to be a boxing fan to have heard the Mike Tyson story, the former undisputed heavy weight boxing champion of the world. But what has boxing got to do with successful investing you may well ask? Well I think his story can teach us some very valuable lessons. I’ve been both an investor and a financial adviser for 30 years. I’ve seen a lot of things happen in that time and have seen the financial world change a great deal. But some things are constant in the financial world
So what on earth can ‘Iron’ Mike teach us about investing, after all he has got through vast amounts of money in his time.
By the time James ‘Buster’ Douglas climbed into the ring at the Tokyo Dome on the 11th February 1990, Tyson was the undisputed heavy weight champion of the world. Tyson was the youngest holder of all the world titles at the age of 20 years, 4 months, and 22 days old, winning all 19 of his professional contests, 12 of them by way of ‘knock out’. At the time Tyson was regarded as invincible and all predictions were that Douglas would lose as all the previous 19 had, most likely by way of a ‘knock out’ as well. Only one betting company was prepared to take bets on the outcome of the fight, that’s how one sided it was meant to be.
So what was different and why did Mike Tyson lose to a man regarded as an underdog?
Without doubt Douglas had a big enough reason to win, most likely because his mother had died just 23 days before the contest and he had promised his mother that one day, he would be the heavy weight champion of the world. But that’s not the lesson about investing which we can learn from this story. You see even though Douglas was doing a great deal better than anyone had predicted, Tyson floored Douglas with a right upper cut in the 8th round. Although there was some controversy over the count, Douglas may have been down, but not out. Saved by the bell, Douglas’s corner set to work and bouncing back in the 9th, the fight started to turn. Although Tyson tried in vain to win the fight in the 9th, he was unable to press home his advantage and a resurgent Douglas put Tyson on the canvass for the first time ever in his career in 10th round and Douglas’s place in history was secure.
So what’s that got to do with investing, I hear you ask.
There is four important lessons, which we can all learn from the Tyson Douglas story. In my view, Douglas had three things in his favour that night and Tyson made one fatal mistake. First of all, Douglas had a plan; secondly, he knew had to stand the test of time, but most importantly, when it all started to go wrong, he kept sight of the end goal. And what was Tyson’s undoing? The game eventually changed. He kept doing what he had always done, but in the end the opposition worked out that they had to do something different, which is what Douglas did. So the old adage of ‘if you always do what you what you always do, you will always get what you’ve always got” doesn’t always stand true.
So when it comes to being a successful investor, knowing what it takes to succeed and what to mistakes to will have a big part to play in whether you are going to be an investment winner.
- Having a plan and a strategy is essential; otherwise you are investing with no purpose and will increase your chances of failure.
- Knowing you investing for the long term is essential. Don’t get derailed by short term ‘market noise’. It’s too easy to get distracted by short term market volatility and change your long term strategy.
- Remember, the game will change. So relying on an old strategy to always work may well lead you to failure. Always be mindful that the world changes and as an investor you have to change with it.
- But the big one to be able to get back up after you suffer a ‘knock down’. Many investors have one bad experience and it’s a game finisher. They lose faith in investments and never invest again. The thing with investing is this. You will suffer knock downs, but history has always shown that they are rarely ‘knock out’ punches. Get back up and get right back to jabbing away.
Investing successfully can be a serious challenge for all of us. I am very much on that investment journey myself.
Always consult a qualified financial adviser before making investment decisions. The above article is only for guidance and should not be taken as advice. If you would like to talk to me about getting your investments on track please contact me.
Contact Martin Dodd on 01902 742221 or email him at [email protected] if you would like talk about money issues.
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