As a clean right cross hit me squarely in the face, my perspective shifted in an instant. Amidst the intensity of my sparring sessions, my mind was always preoccupied on the unavailing task of deciphering my opponent's next move. Yet, that sudden blow served as a profound realization - losing sight of my own plan and fixating solely on the opposition has dire consequences. It was a realization that the lessons from my training in Krav Maga had far-reaching applications. It became evident that even during my 19 years of professional investing, I had been inadvertently grappling with a similar challenge—helping people prevent the detrimental consequences of losing sight of their own plan and becoming overly focused on external factors.
In seemingly unrelated domains like self-defense training and professional investing, one can discover unexpected parallels that can enhance our understanding and approach. Here we explore the intriguing similarities between training in Krav Maga and the skills required for successful investing. Surprisingly, the key lies not in fixating on the opponent or short-term market fluctuations, but instead focusing on one's own strategy and long-term goals. Both disciplines emphasize the importance of mindset, technique, awareness, and adaptability. These are the lessons that have helped me become a professional investor, efficient practitioner of Krav Maga, and lead a more fulfilling life.
Mindset.
In moments of decision, the contrasting forces of ego and heart come to light. Ego, driven by bravado and a craving for glory, whispers enticingly, urging us to take the fight. Yet, our heart speaks from a deeper place, encouraging us to choose a different path—one that prioritizes safety and well-being above all else, urging us to simply walk away.
This battle between ego and heart extends beyond self-defense and permeates the realm of investing as well. Ego tempts us to chase after extravagant returns flaunted on social media, tempting us with visions of quick gains. However, our hearts can act as a steadfast compass, reminding us to remain grounded and committed to a thoughtfully crafted plan. Surrendering to the ego's desires risks jeopardizing the hard work we've diligently put in.
In investing, this can manifest as the decision to continue investing during market downturns, even when others are gripped by fear. It is not easy to go against the prevailing sentiment, but the reality is that by persistently investing through downturns, investors can accumulate more shares at lower prices, ultimately increasing their exposure to a market recovery. This strategy has proven successful in our client portfolios, with those who steadfastly maintained their strategic asset allocation and continued to invest throughout 2022 are fully recovered and now realizing gains.
Frequently, the optimal course of action lies in defying our immediate instincts and going with the natural flow of things. It is a paradox of life that choices leading to short-term comfort often yield long-term detriment, while decisions entailing short-term difficulty pave the way for favorable long-term outcomes.
Technique.
Efficiency and effectiveness distinguish the right approach from the wrong in every endeavor. YouTube street fights showcase wild haymakers, contrasting the precise and efficient technique displayed by fighters like Charles Oliveira and Amanda Nunes. Similarly, we have encountered stories of DIY investors losing their life savings due to the hype surrounding meme stocks, contrasting disciplined professional investors who grow wealth strategically over time.
Krav Maga uses techniques that capitalize on natural responses during high-stress situations. In Krav Maga, these techniques include stances, movement, strikes, falling and dealing with chokes, headlocks, bearhugs, edged weapons, blunt objects, and guns. For example, when faced with a choke, the instinctive reaction of bringing the hands up to remove the attacker's arm is integrated into Krav Maga techniques. The focus is on practical actions that align with natural responses. Additionally, Krav Maga acknowledges that sometimes a counterintuitive approach is necessary, such as closing distance when facing an attack from a blunt object like a baseball bat. The techniques taught in Krav Maga are designed to be executed even when practitioners are fatigued and under duress, recognizing the sub-optimal physical and mental states during real-life confrontations.
An efficient investment process should use techniques that capitalize on the natural tendencies of markets by leveraging the principles of diversification and risk management to optimize portfolio performance. This approach remains crucial, particularly within high-stress economic environments. To build a resilient investment portfolio, it is essential to establish a strong foundation comprising a diversified range of asset classes like public stocks and bonds, large-cap cryptocurrencies, and institutional alternatives. These allocations should be adaptable, aligning with each investor’s unique life aspirations. Furthermore, consistently adding to investment portfolios at regular intervals allows us to capitalize on market corrections and smooth volatility. By adhering to proper techniques, the investment plan can be executed successfully regardless of prevailing market sentiment.
Awareness.
In both the realms of self-defense and investing, one key lies in cultivating awareness rather than succumbing to paranoia. By cultivating awareness in self-defense, we can preemptively identify potential threats. In investing, we can make informed decisions while maintaining a level-headed approach, avoiding irrational fears or impulsive actions.
In Krav Maga, understanding that attacks unfold on a timeline allows us to adopt a winning strategy - catching potential threats early and avoiding them altogether. This entails being conscious of our surroundings, recognizing any elements that seem out of place, and staying vigilant. By recognizing potential dangers in advance, we can simply avoid them, but we must also rely on our combative training if caught off guard. Our mindset is one of vigilance and adaptability, ready to seamlessly transition from evading prey to assertive predator, if needed.
In the realm of investing, timeline is also crucial. Constructing our investment strategy in line with the timing of our financial goals is imperative to ensuring the money is there when needed. The earlier we identify our objectives, the more aggressive we can be in our investment strategy. When our financial goals are distant, we can tolerate higher volatility in pursuit of potentially higher returns. However, as we approach our target, stability becomes paramount, and we must be willing to accept lower returns to safeguard our gains. To navigate this timeline effectively, it is essential to establish clear and well-defined objectives that are regularly reviewed and adjusted as needed. By proactively recognizing our financial aspirations earlier, we can rely more heavily on investment returns. Conversely, as time progresses, our focus may need to shift toward increasing contributions to compensate for the shorter investment horizon.
Understanding the dynamic relationship between time, goals, and strategy allows us to optimize our approach. If we align our awareness with the specific timelines, we can make informed decisions, adapt our strategies, and optimize our chances of success in both domains.
Adaptability.
Both in Krav Maga and investing, the techniques cannot remain static; they must be dynamic and adaptable to the ever-changing world and circumstances we face. In Krav Maga, it is crucial to learn the foundational techniques and then train in various scenarios that simulate real-life situations. This includes practicing against multiple attackers, with limited mobility, on different surfaces, and in different environments, such as enclosed spaces or crowded areas.
Similarly, in investing, we need a flexible system that allows us to adapt our asset allocation as our life circumstances evolve. This involves having a portfolio structure that provides market exposure while considering our liquidity needs. It is important to be agile in implementing our investment strategy, adjusting the allocation targets based on changing goals and market conditions. By diversifying across the risk spectrum, from cash equivalents to institutional alternatives, we can optimize our portfolio's risk-adjusted returns.
Moreover, implementing investments using single-asset class ETFs grants us the flexibility to rebalance our portfolio effectively. Unlike target-date funds that automatically rebalance based on a predetermined schedule, using single-asset class ETFs allows us to choose specific asset classes that have performed well or underperformed based on our objectives. This enables us to make strategic adjustments and capitalize on market opportunities, aligning our investments with our evolving financial goals.
In conclusion, the lessons from Krav Maga can be seamlessly applied to the world of investing, offering invaluable insights for success. By emphasizing mindset, technique, awareness, and adaptability, we can navigate the challenges of both self-defense and financial markets. It is crucial to prioritize a strong and disciplined mindset, resisting the temptations of ego and focusing on long-term goals. Just as efficient technique is vital in Krav Maga, adopting the right investment strategies and diversification techniques is key to optimizing portfolio performance. Cultivating awareness allows us to make informed decisions while staying level-headed, avoiding irrational fears and impulsive actions. Finally, adaptability is essential in both domains, recognizing that techniques and strategies must evolve to address changing circumstances. By integrating these lessons from Krav Maga into our approach to investing, we can become more resilient, effective, and successful in our financial endeavors.
JUSTIN WOLLMAN
PRINCIPAL | INVESTMENT ADVISOR INTENT INVESTMENT MANAGEMENT 415-717-2661 www.intent.finance justin@intent.finance