Winning the next rally

Tennis was fast becoming the forgotten sport of the Australian Summer but the success of Ash Barty, the most Googled Australian of 2022, has helped participation rates soar again.

Data estimates suggest that a whopping 1.5 million Australian’s picked up a racquet throughout 2022.

Most of us will struggle to master the backhand slice let alone reach the heights of winning Wimbledon, the French and Australian Opens but there are plenty of mental lessons we can take from her time on the court to improve our investing skills.

Avoid making unforced errors…

Portfolio management mimics a long rally in tennis where you will be forced to make an ongoing set of decisions with each leaving you in a better or worse position based on the quality of the action preceding it.

One of Barty’s biggest strengths was starting each match with a clear strategy that often slowly but surely placed her opponents into increasingly uncomfortable situations until they committed an error themselves or were so out of position that she could win with a simple, lower risk shot.

Achieving your investment goals just like winning a match doesn’t happen immediately even if you do hit a few aces along the way. Starting and committing to a clear investment plan that allows you to reach your target incrementally without taking unnecessary amounts of risk or making rash decisions is the first step to success.

Learning to handle adversity…

While a clear plan puts you on the right path, you won’t win every set and there will be times where your portfolio may experience volatility or negative performance making you question if you’re on the right track.

Paul Annacone, the former coach of Roger Federer and Pete Sampras, spoke in the Netflix documentary series Breakpoint and said…

“No matter your level, you’re only as good as your mind lets you. Your mind is going to drive your ability to achieve what you want on the court… the ability to process without letting emotion overwhelm you”

Handling these “big moments” can be the difference between winning and losing tournaments but when it comes to investing it can come with even greater consequences.

Deciding to exit the market or switch strategies when times are tough can result in crystallising losses that can be harder to recoup in the long-term and can leave you with a portfolio of assets that don’t reflect the goals you are looking to achieve.

Ash Barty was renowned for her composure in adversity, choosing clear thinking instead of emotion and stepped back to view the bigger picture which allowed her to excel – we should all aim to do the same.

Moving onto the next opponent…

Winning a Grand Slam means facing and beating seven different opponents over the course of two weeks which implies a necessity to adapt and evolve over time to put your best foot forward.

Yes, we have warned against making kneejerk reactions to market movements but there does come a time when reviewing where you stand and potentially making an adjustment is warranted.

When should this be though?

Ash’s biggest adjustment was to walk away from tennis at the tender age of 25 still at the peak of her powers citing the lack of drive to maintain her incredible dominance of the sport.

Consensus on when you should adjust your investments is when your objectives or goals no longer match the mix of assets in your portfolio.

Barty openly said her goals have shifted towards starting a family and enjoying other passions such as golf.

In the portfolio of life, it was out with the racquets and sweat bands; in with the nappies and prams with perhaps a round or two on the side.

It’s hard to relate to retiring at 25 but easy to see how buying your first home, starting a family, planning towards, and achieving financial independence in retirement are key goals in life that should be at the forefront of your mind when restructuring your portfolio instead of the latest news headline or tweet.

If you would like to discuss your investment goals and how we can help you achieve them, contact our friendly team at invest@investsmart.com.au or through the chat function in the bottom-right of your screen.