“It’s not the shoes!” (The Financial Athlete #85)

When my nephew was about 10-years-old, he pestered his dad on the basketball court. “I need Air Jordan’s! I’ll play like a pro with a pair of those on my feet.” It seemed every time something went wrong for him — missing a lay up…the ball stolen from him…left behind as a defender — he’d have the same excuse, “If only I had those Air Jordan’s I wouldn’t make so many mistakes!”

Finally, his dad tired of him nagging. He told him in a fatherly voice, “It’s not the shoes. It’s the player.”

“Huh?” said my nephew.

“Shoes don’t make players into great players. The player makes himself a great player.”

“So, you mean you won’t buy me the Air Jordan’s?” the boy said with quick wit.

“No. First, improve your game. As a reward I’ll buy you those Air Jordan’s. By then you’ll realize you don’t need special shoes to be a great player.”

In the same way, it’s not the investment vehicle (stocks, bonds, real estate, commodities) that makes a great investor. What makes him a great investor is he chooses wisely among thousands of investment opportunities, most of which are poor-to-mediocre. He is a perennial student of the market. He always does his due diligence. He patiently waits for markets to move in cycles and buys aggressively in times of maximum pessimism.

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” — Sir John Templeton

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