In Colorado Springs, there lays one of the tallest peaks in US, known as Pikes Peak. It’s 14,200 feet above sea level and over 8,000 feet from the base city. Without much training, but hope, desire and excitement we decided to climb it. We had our hopes in check and already knew we couldn’t do all of it, especially in one day. So we decided to go half-way, still over 10,000 feet above level, and more than 7 miles of climbing, one way.
What I learned, it more than reinforced what I know about the stock market and the emotional response most people give when faced with the ups & downs of it.
First, but why?
Many people have asked us about our trip overall, and maybe the same question stands for this climb too. But, why? The answer could be a simple, ‘Why not’? But I would also say that there’s a little thrill, excitement, exercising, and maybe a bit of a challenge. Plus, getting to enjoy nature, feel it inside you and of course the views, ahh the views. Same with investing and saving in general, many ask ‘Why worry, just enjoy today’. While hiking is a pleasure for now, and some for later, memories and all, investing is for your older self. Many times we forget that we’re not saving/investing for the neighbor. It’s just yourself and an older and weaker one at best. That’s why?
Start
We started a bit late, of course, not the professional hikers we are. But we started and climbed the first mile or so without much effort, even though they mentioned it was the hardest and steepest part. I guess we were fresh. Slowly but surely we had to take small breaks, the altitude and steepness, I guess, were doing their thing. In investing, the start is usually the hardest part too, many start late in their 30s when they start settling down, getting married and thinking about buying a house. Emotionally they’re prepared, they want to start as they’ve held back for a while (mainly all their 20s) and are eager to do so. Most of the time, the beginning (after starting) is not too hard mentally, they want to do it. They start with some money and it just seems easy.
While it may seem easier to start, continuing it gets a bit harder. Same with our hiking, at mile 3 we thought we had walked at least 5 miles. It just felt that way. The steepness continues and the breathing starts to get heavier. In investing it’s the same, at this point you’ve been in the market for a couple of years, have (most often) enjoyed a decent move in the market, either up or down, and feel at least a bit unease about it. Is this how it’s supposed to feel?
But you continue
You’re supposed to keep going, you told yourself to hike up to 10,000 feet and you want to challenge yourself. It’s about half point of the 7 miles and you want to keep going, but your body is giving you mixed signals. You also want to allow for the time, effort and legwork to come down, you won’t be sleeping up there. Same with investing, you know it’s for the long term, you know you have to persist through the ups & downs and it will be good at the end, right? The market at this point is also going higher and you feel good about it, just a bit uneasy about the potential crash, you know? Will it come? When? How? What should I do?
We arrive at our destination
We finally pushed through pain and fatigue and achieved the halfway camp, called Barr Camp. It was getting cold so we got refuge inside, took out our food we brought and bought a $1 delicious hot chocolate. The best hot chocolate in the world. After 7 miles of steep hiking, any hot drink (even water) would taste delicious. Oh, what a feeling. For many people, when the market is up and positive and all feels good, everything’s just right, similar to our current market. But we knew we had to go back down, and the market (wants it or not) knows that it works just the same.
It was getting dark
We left Barr Camp but we knew we had about 1 hour or so of daylight. The climb took us 4 hours and we knew it would take less to go down, but still, at a minimum, it would be 2 hours. Which means we had to do half of it in the dark, yeap. Emotionally, the stock market drop feels about the same. You know you’re about to go down, that feeling in your stomach, but what can you do? Can you change it? Can you not participate in it? Can you get out just before? Usually, for most people the answer to all those is NO. So, just brace for it, mentally prepare yourself and let the ride begin.
Getting down is faster than going up
In the stock market there’s a saying that the market goes up in an escalator but comes down in an elevator. The drop is much faster and also comes at a much steeper angle. In hiking it is very similar, the first part of going down, trying to make good time, we did it running. In investing that’s where most mistakes happen, as everything is moving so fast, your mind and emotions mix in different doses giving you most often non-optimal scenarios. If the stock market was a real hike that’s where most people fall off the cliff or at least stumble, fall and get hurt. We knew that, so we kept going, carefully.
Darkness hits
Not that we’re afraid of the dark, but there’s something about a huge mountain, being over 8-9,000 feet above sea level and looking at the city below as if you’re on a plane. Great view, but we also need to get down of this thing. Prepped with flashlights, food, water and even sticks (and a knife) we felt Ok, but it’s still a mountain and not our native land. It’s more the land of deer, wolves, snakes and even bears. At least those are the animals that frequent it and call it home. In the stock market emotional cycle, this happens when the market has dropped some, then paused and it just feels as it will drop more, there’s no good news, just darker and worse stories. Will this ever end? Should I just sell now and get it over with?
To make our adventure more colorful, we were alone in the mountain, everyone had managed to go up or down before dark, and we didn’t see anyone going up or down for at least 3 miles or over 1 hour. Then, out of a sudden two guys are climbing it, they seem a bit confused and ask us for directions? Them: How far from here? Me: To where, the top? Them: Yeah, I guess. How far are we from the top? How far from the bottom? Me: you’re 1.5 miles from the bottom and 5 miles from the middle and probably forget about the top for tonight.
But it hit me a bit how confused they were? Were they really? What were they doing climbing it at night so confused about what they were doing?
In investing it’s usually the same, you get all kinds of weird feelings, emotional people that tell you what to do and it just gets very fearful and confusing. What’s one to do? You ask people and they all have a story and something you should do. Usually, the best thing is to do nothing, even if a change is needed, it’s not the right moment, mentally and market-wise to do such.
Arrive at the bottom
So, we kept going and finally arrived at the base, tired, but happy that we made it. We survived, yeahhhh… hahaha. Exhausted but relieved that even after encountering darkness, 5 deer that stopped in front of us, and 2 lost and suspicious guys, we’re now at the bottom. Throwing away the improvised weapons and hiding the real ones we could now walk on pavement. It’s even darker now, but we know it’s Ok. In investing you don’t know that at the darkest moment there’s usually the best moment too, that light is just further ahead and there’s really nothing to fear. But many emotional mistakes happen at this period, many people sell, fear hits the peak and there’s just no more convincing to hold on. They’ve held for a while and it’s just gotten darker, goes through their mind.
It was worth it
Our hike with the ups & downs, physical and emotional was really worth it. As the harshest one we’ve done so far, 15 miles round-trip, over 4,000 feet in altitude change and more than 8 hours in total, it was a memory we will never forget. Investing is the same, it’s an experience that if understood how it works and remove most of the emotional responses is something that will bring satisfaction and enough income to help you into your future years and goals. The math of it is easy to implement and even understand, it is the emotional part that gets most in trouble. Paired with misinformation or not having the right knowledge, many people fall prey to their own emotions and make mistakes mostly at exactly the wrong time.
We went home and straight to bed. Tomorrow was a beautiful day and we (while hurting) were recalling all that happened the day before. In investing, the ‘daytime’ comes too, sometimes it takes a while, but it does come. It’s just that many people can now just watch it from the sidelines, having made emotional mistakes (and fallen off or sold) during the ‘darkness’, they can just watch with hurt feelings. Few others that understood how it’s just like a hike and managed their emotions are appreciating how it’s going back up, again, just like before.
“History doesn’t repeat itself but it often rhymes” – Mark Twain.