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Financial Literacy

What Muhammad Ali Taught Me About Investing

About 15 years ago, my wife Anne and I decided to take our two boys – six and 10 at the time – to Disney World.

We stayed at Disney’s Grand Floridian Resort, conveniently located just one monorail stop away from the Magic Kingdom. But on the second night of our trip, we decided to leave the park and eat at a Japanese restaurant in downtown Orlando.

After a great dinner, we returned to the hotel around 10:00 p.m. The valet was busy, so we had to wait for a bit in front of the hotel. It was a quiet weeknight evening and we stood there alone.

After a minute or two, a Cadillac sedan rolled up and parked behind our SUV. Deep tinted windows kept me from seeing who was inside.

A woman got out of the driver’s side and walked around to the passenger door. When she opened it, we found ourselves face to face with the greatest boxer of all time, Muhammad Ali.

At first I was at a loss for words. But after he stepped out of the car, I said, “Hey champ, you’re the greatest in my book.”

Ali smiled, then briefly snapped into a boxer’s stance with both fists in front of him. The woman, who turned out to be one of his daughters, led him into the hotel. It was a moment that I still recall as clear as the day it happened.

Even then, Ali’s Parkinson’s disease was evident. But it didn’t keep him from joking around with me, a complete stranger.

This memory snapped back in front of me when I learned of the Champ’s passing last week. Ali didn’t know it, but he taught me a valuable lesson…

The importance of perseverance.

Though his boxing career ended decades ago, Ali continued to fight against his ever-worsening disease. Everywhere he went he always had a smile, especially for kids.

I thought of that after I had my body surfing accident four years ago. I kept telling myself: If he can do it, so can I.

I can persevere.

I’ve been applying this mentality to my efforts to walk again. And I can tell you personally… perseverance pays off.

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Even after four years, I’m still making strides (literally). Twice a week, I walk 20 minutes on an underwater treadmill in the therapy pool. I then spend several hours doing circuit training to improve my strength. I’ve gained 10 pounds so far (muscle, not fat).

About once a month, I increase the amount of weight I move on each machine. On some machines, I’m able to lift or move 50 pounds more than when I started.

It’s all about perseverance.

For an investor, there’s nothing more important. But it’s especially true when markets are not going your way.

The other morning, billionaire investor Ron Baron was on CNBC talking about his funds, stocks and investing.

This guy understands perseverance. He said that his average holding period for stocks is 12 years. Twelve years! Some hedge funds hold stocks for only 12 days – or even 12 minutes.

Clearly, Baron is a long-term thinker. And his $2 billion net worth would suggest that this mindset has paid off in spades.

So it’s no surprise that, like me, he’s a big fan of Tesla Motors (Nasdaq: TSLA).

Over the past three years, his firm has slowly built up a $300 million position in Tesla. He thinks it could become the largest company in the U.S. – possibly the world.

But it will take some time to get there. Which is why Baron plans to hold the stock for 15 or 20 years. Over that period, though, he expects to earn “$6 billion or $7 billion” from the investment.

Obviously that’s an extreme example. But for a retail investor, it’s important that you look past today’s volatility – to the opportunity ahead.

Throughout his career, Muhammad Ali took over 29,000 punches. But he always got back up.

He persevered… and became the greatest.

Think about that the next time markets dip.

Good investing,

Dave


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