Running multiple marathons is, I think, the best way to build the temperament to hold a multi-bagger stock.
I’ve run 5 marathons and have held onto a few multi-baggers.
Let me explain
To hold a company that goes up +10x, usually, not always, you have to face insane volatility.
50% draw downs are common. 80-90% draw downs are a real possibility.
And the stock can sit there for what seems like forever.
You must persevere.
In a marathon, a runner is faced with a similar painful challenge.
At the 20 mile mark - or somewhere near there (mile ~ 17-22) - nearly all runners hit the “wall”.
The “wall” is the point when the runner’s glycogen (stored energy) within the muscles is depleted.
Simply, the body runs out of immediate energy.
The runner’s body has to turn fat or muscle into glycogen. The human body generally is very inefficient at this process.
But you must persevere.
What does the “wall” feel like?
Face first into a stack of bricks. Legs feel like cement posts.
It’s one the most physically painful things I’ve experienced in my life.
I can imagine it’s like getting punched by Mike Tyson, non-stop, in the legs for +40 minutes.
And you can stop the pain any time by quitting and walking.
It’s absolute hell, but you’ll never fully get it until you experience it first hand.
The same is true with experiencing a +50% draw down in a stock.
It’s absolute hell. Torture.
And at any time you can stop the pain by selling.
I could try to describe how horrible being down in a stock >50% is, but you’ll never fully get it.
You have no idea what the “wall” (>50% drawdown) is like until you actually experience it.
Everything I said above is Bull S*&t
Because I, too, have forgotten exactly what the “wall” feels like while running a marathon.
Similarly, my memory of how it feels to hold a stock down >70% for 326 days is foggy.
The human mind is resilient like that.
Days, months & years after hitting the “wall”, your memory of the painful experience fades. The memory is still there, but it’s blurry and incomplete.
The elation of winning the race (or getting the huge financial rewards) overshadows the memory of pain.
And you go back out to try it again.
Even if you’ve experienced the “wall” (or >50% drawdown), your brain will forget the painful parts.
Earlier I said that nearly all runners experience the “wall”.
Who doesn’t experience the “wall”?
The people who prepare a crazy amount.
Elite runners running a 2 hour time in the Boston Marathon, they aren’t experiencing the “wall” the way I described above, if at all.
They’ve prepared so much that their body:
a) has the energy storage capacity to run the full 26.2 at full speed
b) they have trained their body to efficiently covert fat/protein to energy (glycogenesis)
The more quality training you do before a marathon, the less the “wall” hurts.
My first marathon I was ill prepared.
The “wall” was the most miserable experience.
But, again, I still don’t remember how bad it felt.
My subsequent races I trained a little better. The “wall” wasn’t as bad as my first race.
The same is true with the greatest investors.
They’ve prepared so much that they can treat the >50% drawdowns with equanimity.
They’re unfazed by drawdowns.
Proper pre-payment, or woodshedding, is the proper training.
Read more here.
It takes preparation to know which companies to hold and persevere the drawdowns, as opposed to cutting losses quickly.
The more the preparation, the more “enjoyable” the experience.
So let’s recap:
- You have no idea what the “wall” (+50% drawdown) is like until you actually experience it.
- Even if you’ve experienced the “wall” (+50% drawdown), your brain quickly forgets how painful it feels.
- The more the preparation, the better equipped you’ll be able to handle the toughest mental and emotional obstacles (drawdowns).
If you want to build the temperament to hold a multi-bagger… train for and race a few marathons.
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