What Fly Fishing Taught Me About Investing

If you’ve ever met me, you know that I love to fly fish. It’s one of my biggest passions. Recently, I was with a friend fly fishing from the beach in Ft. Morgan. I had made this trip many times over the summer without much luck. The weather wasn’t great, but we both had a couple of hours free so we decided to go anyway.

Upon arriving at the beach, it didn’t feel like our trip was going to be worth the effort. However, we were already there, so we decided to give our best shot. We both came prepared with a multitude of flies since we weren’t sure what the fish would be biting that day. The first hour of the day was spent walking towards the end of Ft. Morgan and casting in places that looked promising along the way. We managed to reach the point without a single bite.

I fished the point for a short while, trying different flies in hopes that something would be enticed. This trip started to feel like the many trips I had made before. With no luck, we decided to make our way back down the beach.

As I walked back, I continued casting in places I thought the fish might be holing up. (Many were the same places I had already tried.) About half-way back, I stopped to make a few casts in a spot where the water looked deeper. After a few casts and no bites, I decided to make one more cast and if nothing took the bait, we would head home. As I stripped the fly in, THUMP! I had a bite! Little did I know that I had finally found the perfect spot and in the next two hours, we caught over 60 speckled trout. It was an incredible experience. I had not had a day like that in years!

Investing in the market this year has been rough for many. This year’s performance has amounted to about as much as my many trips this summer before I finally caught fish. It has been tough for the investor who faithfully contributes to his portfolio only to see very little impact to the bottom line.

Markets like we have experienced this summer seem like the perfect time to pack up and go home. Much like my fly fishing trip, the conditions do not look promising. However, like that trip, there are great opportunities that may be in store. Some of the top-performing days often occur during these times of uncertainty, which reinforces the need to stay fully invested despite the volatility. BlackRock recently published the chart below which shows the negative impact of missing the top-performing days over the last 20 years.

Don't Miss Days in the Market

From the chart, you can see that missing just 5 of the top-performing days could have cost you $196,137. When the portfolio misses the best 10 days over the 20 year period, the return is reduced by 50%! Since no one can accurately predict when the market will rise or fall, it is critical to stay invested throughout the volatility. I had no way of knowing which day I would catch fish, but I continued to go fishing knowing that over time the likelihood of me catching fish improves. It is impossible to know which day the market might soar, that’s why it is so important to maintain a long-term perspective. The longer you are in the market, the greater your chances of realizing positive returns.

So what do you do in times like these when you’re feeling the pressure to pack up and head home? You continue to work a strategy that has proven successful. On all of my fishing trips, I bring multiple flies because on some days one fly works well and others do not. I cast my line in places that I know are conducive to catching fish, and I am persistent in making the trips—even when the conditions don’t look so great. The same is true for your portfolio. You should continue to invest, even though the conditions look poor; you should keep your portfolio diversified because it is hard to know what is going to perform well next; and you should remain disciplined and dedicated to your goals.

It’s like my grandfather always said, “There’s a reason they call it ‘fishing’ and not ‘catching’… you don’t always win.” On any given day, the same is true about investing. But with time and discipline, you are almost sure to find your perfect spot.