I just got back from a great time white water rafting the Colorado River with my father. On the long car ride home I got to think about how white water rafting can be a lot like investing…
Here are the similarities that I see:
Have a guide and listen to him/her – The great thing about our trip is that my son was our guide. He has been living in Glenwood Springs this summer working for Whitewater Rafting as a rafting guide and rock climbing when he is not. He is doing a great job, but he had to go through several weeks of training to be certified for his position. As part of the crew we received our life jackets and pre-trip instructions. We were told when we needed to paddle and when we were not to paddle. We were able to conquer ferocious rapids like Shoshone, Man Eater, The Wall, and Tombstone. We didn’t even come close to flipping our boat and he deserved nice tip for guiding us.
With the markets, it is important to have a guide (advisor) that is licensed in his/her occupation and clients need to listen especially in times of turmoil. The rapids in investing can have their own scary name like Black Monday, Tech Bubble, GFC, Flash Crash, etc…. You are all in this trip together so make sure your guide has your best interest in mind when advising you and isn’t going to flip the raft.
Be ready for all conditions – My family went earlier in the year on a cold summer weekend in June with the temperature around 50 degrees and a cold rain. I don’t think anybody really wanted to get on a raft and face the elements, but we did. We all had had wet suits, neoprene booties and rain jackets on. However, that first hit of 40 degree water sent shivers down us. We just paddled hard to warm up. In the end we had a great time even with the teeth chattering and we were glad we did it.
Sometimes the markets can be just as inhospitable. They may be very volatile with big ups and down like a Class 5 rapids. Or like a raging river, the market might seem very high and you really do not want to invest at this time. That is why it makes sense to know your risk tolerance. Understanding how much of your investments you want in the white water river versus how much you want in a more tranquil stream is important before you start.
Respect the river – My son is always assessing the river and everyday can be different. Higher or lower water can make for a different trip. Rocks can almost appear out of nowhere Also, he has to assess his crew to know what rapids he should maneuver over or avoid. He can also advise on the type of trip for people to take. Do they want the thrill of Class 4 rapids (Aggessive investing) or a more subdued, but still enjoyable Class 2 rapids (like a Balanced Investing approach).
Enjoy the ride – Look at the mountains, enjoy the wildlife like eagles and mountain sheep, and the thrill of conquering the rapids. Similarly, enjoy watching your portfolio increase in value over the years, having money saved for a rainy day or reducing your taxes can almost be as rewarding
If this blog has you interested on wanting to book a rafting trip, let me know. My son will be there for a few more weeks.