Thursday, January 17, 2008

Retirement Planning and Dennis Connor

Numerous people turn to books written by the highly successful among us trying to mine some keys to what makes them what they are, try to understand how they achieved what they have succeeded in doing and perhaps, take what they might be able to tell us and apply it to our daily struggles. This does not always mean, that just because you read one winner’s book, that you can become a winner as well. Emulation is no easy feat.

I threw a quote from renowned skipper and yachtsman Dennis Conner in the book as we begin the section on investing as an “Early Bird”, a title I give to the investor just beginning her or his journey. Mr. Conner won the America’s Cup four times, first in 1974, then again in 1980, 1987 and finally in 1988.

Now this race, won by Americans – super wealthy Americans I might add – for 132 years in a row, captured the imagination of the average citizen because, unlike previous challenges, Dennis Conner insisted on year round training of his crew. Prior to this, the challenge, which was offered as a goodwill gesture among nations, was the playground of the super rich. That winning streak was the longest in sports history (which Conner had the distinction of breaking when he lost in 1983 to Alan Bond of Australia).

Connor’s approach to the sport was based on what he liken to consistency rather than flash or brilliance. This is the cornerstone of what retirement planning should be even if you are just beginning to save. There are some schools of thought that suggest all out risk taking for the most youthful investor trying to build a retirement portfolio. I disagree.

There is a psychological element to losing that not all beginning investors share. There is the chance that once an investor feels the sting of an investment downturn, they might not see it for the opportunity that it presents. More than one financial writer, myself included, has suggested that starting young (in their twenties) will provide over twice the investing opportunities than if they waited until they were in their thirties. Compounding provides some of that proof. The other is given to investors via the markets.

No one can predict what the markets will do from day-to-day and it becomes even more difficult as you look at a month-to-month or quarter-to-quarter snapshot. What does become clear though is how the chance of your investment increases over longer time spans. But not many twenty year olds can see very far into the future.

Connor did write a book about his successes called the Art of Winning. In it he outlines what could be considered no-brainer ideas that have been repeated numerous times over numerous books. He suggests that attitude (envisioning success) performance (seeking to learn from the best in your field), teamwork (surrounding yourself with competent people who share your goals), competition (nothing like a little challenge to help you on the road to self improvement), and goals (knowing what you are capable of and how you plan on getting there) all play a role in who wins and who does not.

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