There are old investors and there are bold investors…
Thanks to a summer spent playing American Football computer games 20-odd years ago, my childhood neighbour and I still meet every year for the Super Bowl.
My friend continues to watch as many regular season games as he can and dreams of his team – the Pittsburgh Steelers – recapturing past glories.
But I only really go now for the ritual and the chat. Honestly, most of my attention is spent thinking up new ways to stay awake until 4am.
The past few years however have given me something to root for – Tom Brady, the quarterback for The New England Patriots.
Brady and his Patriots have won the Super Bowl so many times it’s a wonder the other teams still bother to show up.
But that’s not why this All-American hero gets my support.
No, I cheer him on because in a brutally competitive sport – where one dangerous tackle can end a career – Brady keeps winning at the grand old age of 41.
Pretty fly for a 41-year old guy
Theories abound as to how Brady can outplay opponents young enough to be his sons.
Some point to his near-vegetarian anti-inflammatory diet, or to the healthful influence of his supermodel wife, Gisele Bündchen.
Rivals suspect a pact with the Dark Side of the Force.
But I believe the real reason Brady continues to win Super Bowls is because he still has a lightning fast (American) football brain.
After all, the word “quarterback” is synonymous in U.S. vernacular for strategic leader –from CEOs to generals to visionary middle managers.
While Brady may no longer be able to outrun or outmuscle his foes, he can still outthink them.
You’ll understand it’s easy for someone who has watched dozens of Super Bowls as an adult to warm to a guy who flatters us 40-somethings into thinking we’ve still got it.
Though in truth, with sport I never really had it.
But in investing – where I might fantasize I’d be quite the star in some alternate universe where cheerleaders ra-ra-ra great share trades – I’ve long been comforted by all the famous old investors who put in long shifts.
Warren Buffett, Charlie Munger, Howard Marks, Carl Icahn… very few legendary investors are exactly in the first flush of youth.
Of course, you’ve got to make a few billion before anyone calls you great. Compounding takes time.
But the point is these old sages are untroubled by their dodgy hips or fading eyesight.
Investing is something I’ve long assumed I can grow old doing well.
Middle-aged masters of the investing universe
You can imagine my disappointment then to see an academic study concluding recently that investing performance peaks somewhere between your mid-30s and mid-50s.
Worse, the academics saw a sharp drop-off in average performance over 60.
There goes my retirement hobby!
Of course, we’re talking about averages. The careers of octogenarian investors like Buffett and Icahn prove old age need not lead inevitably to investing failure.
But I do think the research raises important issues for any of us managing our money.
Because it’s a fact of life we tend to accumulate our greatest wealth in our later years.
For most of us that’s the point of investing – securing a nest-egg to see us through a comfortable retirement.
Yet if our ability deteriorates with declining mental acuity as the academics suggest, then we could be managing most of our wealth just as we begin to do it badly.
Seek help if you need it
It’s all very well being a great stock picker in your 20s, 30s, and 40s.
But I wonder if it’s better to look more towards collective funds – or even to a financial planner – in your 60s and 70s?
At the least, any big financial decision might be worth a second opinion or sanity check.
This is especially the case if you have a spouse or other dependants who stand to lose out too if you begin mismanaging money earmarked for their wellbeing.
Of course I hope we all remain sharp and on top of our portfolios well into our dotage. But it’s as well to be alert to the danger that this might not be the case.
The sad truth is we tend not to see our own declining abilities until some damage has been done. (Spend ten minutes with me on a dance floor nowadays to see what I mean.)
Quarterback Tom Brady will get obvious clues the game is up for him. Clues such as a 20-stone linebacker squashing him flat on the football field.
But in a worst-case scenario, our wake-up call could come only when we’ve done real damage to our finances. A blow we might no longer have time to recover from.
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