Plans and Rules Work for Both Marathons and Investing

On Sunday, I ran the Bank of America Chicago Marathon in 4 hours and 54 minutes. Though not fast overall, it was good enough to meet my pre-race goal of doing a marathon in under five hours. It was also 28 minutes faster than I ran in the Indianapolis Monumental Marathon last year. (Kudos go out to our head of marketing, Peter Nguyen, who completed his fifth Chicago Marathon on Sunday.)

If you had told me in March 2020 that I would run two marathons and three half marathons over the next approximately 30 months, my response would have been, “I’m not a runner.” (I went to the gym regularly but didn’t run very much.) Yet, just like investing starts with opening an account and depositing that first dollar, I laced up my shoes and started going for a walk every morning the day after we abruptly switched to working remotely. Left without access to the gym, I started incorporating some running into my morning workouts, which eventually led to thinking, I wonder if I could do a marathon?

Fast forward to present day, and I’ll confidently add that what I did before the marathon and having a strategy for the race itself helped immensely on Sunday. Rest assured, this week’s commentary won’t just be all about running. I’m also going to share some of CNBC reporter Bob Pisani’s investing beliefs, which can serve as a foundation for creating your own rules. I spoke to Pisani recently about his new book, “Shut Up and Keep Talking” (Harriman House, 2022), and investing for a forthcoming AAII Journal article. 

Just like the AAII PRISM Wealth-Building Process calls for identifying your goals and then creating a personalized strategy to meet those goals, I personalized evidence-based marathon training plans. My twice-a-week interval workouts were based on studies by physiologists and coaches. My longer Saturday runs gradually increased in mileage from five miles to a peak of 20 miles, based on plans by well-regarded running coaches Jeff Galloway and Hal Higdon. (Higdon helped design the marathon training program for the Chicago Area Runners Association, commonly referred to as CARA. The North Shore Distance Running Club, which I trained with, follows the CARA program.)

The training not only built up my endurance but also allowed me to formulate rules to adhere to while running the marathon. I showed up at the starting line knowing what pace I could maintain, what I was going to use for fuel (Clif Bar Minis and Gatorade Endurance Energy Gels), when I was going to hydrate (at every aid station, with sips from my water bottle in between) and what heart rate was too high to sustain. I also knew what alterations I would make when fatigue set in (and, oh boy, the fatigue really set in after mile 20).

In PRISM, we provide guidelines but emphasize the importance of personalization. It’s the same thing with running. With experience and monitoring, you learn what adjustments work best for you. This is key because in both investing and running the optimal plan is the one you can stick with.

Bob Pisani’s Investing Beliefs

In his book, Pisani discusses some of his key investing beliefs. I’m sharing a few of them in summarized form, because I think they can serve as cornerstones for developing rules governing how your personally invest:

• Stocks outperform bonds and cash over the long term: If you want to grow wealth, you need to maintain an ongoing allocation to stocks.
• Market timing does not work: Keep in mind that this is coming from someone who has reported from the New York Stock Exchange (NYSE) trading floor for more than 30 years.
• Investors are getting a better deal on buying and selling stocks than ever before: Commission-free trading and much narrower bid/ask spreads have greatly reduced trading costs. While this is a big positive, I’ll add that it is not a reason either to trade more frequently or to stop paying attention to costs.
• The average investor is better off with index funds: Pisani is a “Jack Bogle disciple” and thinks most investors would benefit from sticking to this philosophy. I don’t disagree. While disciplined, evidence-based strategies can work, low-cost, broad-based index funds should be viewed as the default option. It’s far easier to do worse than to outperform such funds.