This article was first published in the Globe and Mail on September 21, 2024. It is being republished with permission.

by Tom Bradley

Investing is a marathon, not a sprint. It’s a hackneyed phrase but couldn’t be more true. What’s the good of racing past other runners at mile 10 only to hit the wall at mile 23 and stagger in.

Similarly, investing is a lifelong endeavour. It may well outlast your passion for the Canucks or Joni Mitchell. The more time I spend on investment committees and with individual clients, the higher I move the endurance factor on my list of investment criteria. Can a strategy and investment routine be sustained for a long period of time?

Morgan Housel, a partner at Collaborative Fund, says it well. Your objective shouldn’t be the highest return but rather the best return you can earn for the longest period of time.

Let me start with an example. If you’re a young investor with a multidecade time horizon, it makes sense to be 100 per cent invested in stocks. It’s undisputable that stocks provide the highest return over time. But there’s an important caveat. You must stay invested. You can’t waver, at least until you’re much older and have a need for income and stability.

Numbers are useful here. The strategy works brilliantly if you can stick to it when your $100,000 portfolio drops to $75,000 (before it goes to $200,000 and beyond). If you can’t, then another strategy with less volatility, one you can tolerate, will produce a better long-term return.

You get the picture. Being a successful investment marathoner is simple in concept but hard to execute. You need to accept some important and inconvenient truths.

For instance, down markets are the price of admission for long-term gains. Market timing and sector rotation are not viable investment strategies. Getting out of stocks at the right time is impossible to do consistently, and getting back in is even harder.

You need to do something that sometimes isn’t very appealing, namely, diversify. Owning a range of investments across asset types, industry sectors, geographies and currencies smooths the path of returns and more importantly, eliminates the possibility of capital loss. But it’s unappealing to many investors because it means owning things that aren’t doing well (but will help in other market environments) and not owning enough of what’s hot, including the stock your friend is (allegedly) making a killing on.

On that note, the amount of risk taken by that friend likely makes no sense for your retirement portfolio. A stock or fund that can double in a year, can halve just as fast.

And the news cycle is not there to help you achieve your long-term goals. It’s designed to maximize clicks from investors who are not doing it your way. Being a disciplined, long-term investor is much lonelier than going where the media is focused or buying what your friends are touting. It’s boring and dare I say, makes for dreadful dinner party conversation.

Fortunately, there are a few things you can do to deal with the loneliness and build up your endurance.

First, have realistic expectations. Know that every fourth or fifth year your portfolio will be down. On occasion, it might be down a lot. And don’t expect someone who picked a great stock or timed the market correctly will necessarily get it right next time. Luck is often disguised as skill.

Second, have a clear goal for each bucket of money. A volatile strategy doesn’t fit for funds that will be needed in the next one to three years. Conversely, a steady, GIC-like approach is inappropriate for a portfolio with an extended time horizon. Having the goal flashing in your face helps prevent you from getting distracted.

Third, pursue a strategy you can sustain no matter what’s going on in your life. Pick a provider and develop a routine that reflects your personality and lifestyle. One that fits with the amount of time and expertise you have and keeps working when you get busy at work or go on an around-the-world cruise.

And finally, make sure your support system, whether it be your adviser, friend or parent, is in sync with your approach. You want a steady hand when things are going poorly, not an easy off-ramp that takes you back into the short-term news gauntlet.