Over-training (The Financial Athlete #96)

In our culture of more is better, it is from contrary position to ask, “Is there an optimal level of activity?” The answer is yes for both exercise and investing.

Do too much strength training and this becomes counterproductive. The body will produce an excess of cortosol, the “stress hormone”. Cortisol excess increases blood pressure and blood sugar increases, and can cause muscle loss. So then, the rest period is equally important as the training period; and the higher intensity in strength training, the longer time the muscles need rest to recuperate.

Money is the investor’s muscle. Sometimes investors ask money to do too much in a relentless pursuit of very high returns. Observe the disastrous results of over-leveraging and of perpetuating financing for ill conceived businesses.

Steer clear of investing in any over-leveraged asset (business or real estate) and any underfunded enterprise. If it is within your nature to venture into speculative investing, be sure the enterprise has a very strong Balance Sheet for a long runway to reach profitability.

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