There was a time, in my mid-twenties (not quite ancient history, but close), when I decided to buy a motorbike.
Too young for it to be a mid-life crisis, and too old to blame it on youthful exuberance, it was a combination of a much cheaper form of transport (and parking) and the result of a very cool music video that I can only assume did a pretty good job of boosting sales for bike-makers across the Western world.
Knowing that learners were limited to bikes with a capacity of no more than 250cc, I didn't want a 'boy racer' bike, and a Harley was both too big (engine-wise) and too expensive. I ended up deciding on a second hand Yamaha Virago.
And it's how I ended up doing a weekend course to qualify for my L plates.
(Spoiler alert: My riding career ended up, some 18 months or so later, with me in hospital with a badly smashed wrist, after a driver decided to do a U-turn in front of me and sent me into a parked car.)
Other than a trip down a (fading) memory lane, there's a point to this story — a point I was reminded of on social media yesterday.
It all started with a Tweet I sent, reminding my followers to be careful listening to market prognosticators.
That's a general theme I return to regularly, but in this instance, I was referring to those who 'knew' the market was going to fall and/or who 'knew' it was going to keep falling.
(If you haven't been following, the ASX is up some 25% from its March lows, meaning that if you believed they 'knew' those things, you're probably meaningfully out of pocket about now).
I don't count myself among the 'prognosticator' class, by the way — I don't do market forecasts, and I sure as hell don't try to time the market.
What I did say, when everyone was panicking, was that if (and I think when) most companies return to their 2019 levels of profitability, shares that were down around one-third from their highs were likely to get back to those highs — and that gain would be 50% from those lows.
Sure, shares could have gone lower (I didn't pick the bottom — or even try), but if that logic was right, it simply wouldn't matter what happened in the short term.
Which brings me nicely back to my old Virago.
See, it's fair to say I'm not a natural rider. As much as I'd love to have, I just didn't pick it up as naturally as others.
Until…
Watching me ride — slowly and with no few wobbles — the instructor pulled me aside.
"You're watching where your wheel is going, mate" he said.
Which, I'd thought, was kind of the point. After all, where the wheel goes is where the bike goes, right?
Well, sort of. But it's not the best way to actually ride it.
Yes, you want to avoid obstacles. Yes, you need to make sure your wheel goes where you want it.
But you don't do that by looking at the few feet immediately in front of your tyre.
You know what I'm going to say next, don't you?
But just in case, here's the secret, from my instructor:
"You don't look at where your wheel is on the ground — you look ahead of you, to where you want the bike to go".
Bingo.
Yes, yes… obvious huh? But it wasn't to me. At least not until he told me.
And I reckon there's a decent chance some of you are in that boat when it comes to shares.
I don't blame you.
The nightly news covers (rightly) today's ASX movements.
Talking heads (I resemble that remark) are often asked about short-term expectations. Why? Because people want to know.
The problem is that, in my view, the answer should almost always be 'I don't know'. Except that's rarely what they get paid for!
Now, the more you hear that stuff — and by sheer human instinct — we're inclined to try to answer it for ourselves.
You can see the analogy taking shape, right?
Yes, it's tempting, but it's useless.
Trying to guess the short term movements of the market is like trying to ride a motorbike by looking only a few inches in front of the wheel.
Which is what I told a Twitter correspondent who replied to my tweet yesterday.
Just because we can make a guess on the short term doesn't mean we should.
Or, if we're compelled to guess, we should at least not invest that way.
Investing, like riding a motorbike, relies on keeping your head up, your eyes level, and looking off into the distance.
Yes, there'll be bumps. There'll be obstacles. It will be wet and slippery sometimes.
But the only way to ride — successfully — is to keep your eyes out front, focussing on where you want to go.
It's the same in investing.
What's going to happen in the short term? I have no idea. I certainly didn't expect the market to rise so far, so fast.
The good news is that I didn't need to. I bought shares because I expected that the prices I was paying were attractive, given those companies' long term futures.
(It drives the 'smart' investors nuts, by the way; they are so caught up in trying to prove how clever they are, that they miss the bigger picture. Maybe that's why they can get so narky.)
Oh, and if you're wondering, my wrist never did regain its full range of movement. But I did get back on a motorbike (I hired one — mine was written off) one more time, just so I knew that it hadn't beaten me.
There's a lesson there, too.
Fool on!
