How Investing Champions Think

Summary: I talk about the mental game of investing, particularly as it applies to crypto markets. Subscribe here and follow me to get weekly updates.

My friend and colleague Mike Wise pointed me to a book called How Champions Think by Dr. Bob Rotella, one of the top sports psychologists in the world. Rotella is known for his work with champion golfers, athletes, and businesspeople, and this book is the total of his teachings.

I absorbed it.

How Champions Think is packed with mental techniques that can help anyone trying to achieve something exceptional – including those of us who are long-term investors.

I read a crazy amount of books, but when I’m really into a book, here’s my process for deep learning:

• I’ll break out the Post-It Notes and start marking individual pages.
• When I’m finished, I’ll go back to all the marked passages and take notes.
• Then I’ll reread the notes weekly (I set aside Sunday nights for this), until the lessons are etched into my brain.

When I was finished with How Champions Think, it was mummified in Post-Its. It looked like a nearby Staples had exploded.

Here are some of the key takeaways for investors.

Visualizing the Results + Doing the Work

Rotella starts the book by discussing his work with LeBron James, who at the time was struggling with his 3-pointers.

Rotella advised him to edit together a movie of all his best 3-point shots, with his favorite songs as a soundtrack, and to watch this over and over again. This “3-point greatest hits” would help him visualize his goal of improving his 3-point shots, on his quest to become the world’s greatest basketball player.

He also advised James to actually do the work, setting a goal of making 200 3-point shots a day (!), and sticking with it.

Too often we hear about the power of visualization, without the all-important followup of doing the work. You need both.

The movie was James’s visualization aid, but the practice – that daily slog of making 200 shots before leaving the court – was the work.

In investing (especially this new world of crypto investing), you need both visualization and work:

• Visualize the results: Set long-term goals on where you want to be, with a specific dollar amount and timeframe, and see yourself achieving it. (Read more below.)
• Do the work: Don’t just dream, do. Invest regularly, intelligently, and courageously. (Re-read Our Approach.)

(Note: many crypto investors do too much work, trading too frequently, following the hype cycles, and eating up their profits in foolishness and fees.)

Each morning, I start the day with meditation, then I spend a few minutes visualizing where I want to go long-term with my business, my relationships, and my life. Then I shower, eat breakfast, and start doing the work.

I don’t sweat as much as LeBron James, but I’m on a similar mission of excellence. I encourage you to give this routine a try; it’s a great way to live.

Rise and Grind

Another concept is to love the daily grind.

The crypto industry is obsessively focused on quick riches, which is reinforced by media outlets and Crypto Twitter obsessively reporting on price, especially when a token suddenly shoots up in value. More fools rush in, which makes the problem worse.

Rotella talks a lot about developing patience, through good times and bad. The concept is to “stick with it until you get it, but don’t think it’s going to be a straight shot.”

Every professional athlete has times of winning and times of losing. Michael Jordan said, “I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”

This is the “grind” of loving the work, regardless of whether we’re winning or losing today. As an investor, you have to love investing. If you don’t – if you’re just out to turn a couple of thousand into a million – you’re in the wrong place.

Investing, like sports, is not a straight shot. In fact, too much success early on can be a curse. Like the young basketball player who blows all his money immediately after signing, winning big early can lure you into thinking, “This is too easy.” Life will quickly teach you otherwise.

For investors, patience is critical in times like these, when we are confronted by those twin monsters, Doubt and Discouragement. They rear up on either side of us, and many shrink away, cashing out and moving to safer occupations.

Rotella advises us that champions tell themselves: “Be patient. It will come. I don’t know how long it will take, I just know it will.”

And when it does come, he says, it will be a joy. By enduring the losses, we will fully appreciate the win. The grind makes it greater.

Train It and Trust It

In sports, athletes can get so caught up in proper technique that they can’t get out of their own heads. The goal is to “train it and trust it,” or to learn the skill thoroughly, then put it completely out of your mind, allowing your subconscious to take over. This is the Holy Grail.

For investors and businesspeople, the same concept applies. I’ve seen people obsessively read management books, when they already know how to be an excellent manager. I’ve seen crypto investors fall down deep technical rabbit holes, never to find their way out.

One passage in the book, which I papered in Post-It Notes, illustrates this point well. It’s from the golfer Ben Hogan, considered to be one of the greats. I reread this quote so many times that I’ll paraphrase it from memory.

Hogan had been obsessively working on various aspects of his golf game: his drives, chip shots, putts, and so on. Then, “In 1946, I suddenly realized that all this overpreparation, this obsessive drive for perfection, was neither possible, nor desirable, nor even necessary. All you really needed to groove were the basic fundamentals of the game, and that weren’t that many of them. From that point forward, my shot-making began to take on a new and more stable consistency.”

Now, here’s Hogan’s actual quote:

“In 1946, my attitude suddenly changed. I began to feel I could play fairly well every time I went out, that there was no practical reason to feel I might lose it all. I guess what lay behind my newfound confidence was this: I had stopped trying to do a great many things perfectly because it had become clear that this ambitious over-thoroughness, my perfectionism, was neither possible, nor advisable, nor even necessary. All you need to groove were the fundamental movements, and there weren’t so many of them. My shot-making started to take on a new and more stable consistency.”

The fear that he “might lose it all” is common to many of us. For the businessperson, it’s the fear of losing the client, the job, the career. For the investor, it’s the fear of losing the profit, the original capital, the entire bank account.

But if you’ve trained it (i.e., if you’ve visualized and put in the daily grind), then you can trust it. As Hogan said, there’s no practical reason that you might suddenly lose it all. Life doesn’t work that way. You will have setbacks, of course, but for the person with the champion mindset, you’ll eventually bounce back.

Investor Takeaway: 5 Mental Exercises

To become a champion investor (or anything else), here are some exercises for you to try right now:

Visualize: Clearly define where you’d like to be in ten years. What kind of life do you want to be living? What does your job, family, and house look like? Write it down, somewhere that you can refer to it frequently, whether that’s a journal or Evernote.

Repeat: Set aside a weekly time to reread this vision. Sunday nights or Monday mornings are good, but do it first thing, before you get sucked into the work of the day. Block 15 minutes on your calendar, and set a reminder alarm.

Work: Block off time each day to move forward toward this future. If your dream career is not the job you have now, for example, carve out time to get training or experience, even if it’s over a lunch break or before you start work. Make your own version of LeBron’s 200 3-pointers.

Discuss: Sharing your goals with other people – especially supportive people – is helpful for moving toward those goals. Talking about them can also improve your goals by getting you different points of view, as well as opening up potential connections and opportunities.

Review: It helps to evaluate progress against your goals on, say, a quarterly basis. I find it helpful to look at long-term progress against the goal: if you’re working on it daily, you will invariably see long-term progress, regardless of your short-term results.

Most of us are not lucky enough to have a coach like Bob Rotella. No one is going to challenge you to become a champion. But I am.

You have what it takes to be a champion investor, businessperson, parent, partner, or any other life role. Visualize it. Do the work. Love the grind. Train it and trust it. Review results regularly.

This is not just how champions think, it’s how champions act. Let’s be champions.

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