- Identifying an opportunity
Most investors focus on the entry point. It’s the obvious part: spotting valuation gaps, structural themes or dislocations created by sentiment. But a good entry does not guarantee a good outcome.
- Knowing when to sell
This is often harder. The temptation is to take profit too early or hold on too long. Olympic athletes train to execute under pressure; investors need a similar discipline around exits. Being directionally “right” but poorly timed can be just as unhelpful as being wrong.
- Position sizing
Conviction must translate into sizing - but sizing must respect risk. Some trades belong at 1%, some at 5%. Many investors struggle here because conviction is hard to quantify. Yet sizing often matters as much as the idea itself.
- Portfolio fit
Even a strong idea can be the wrong addition if it duplicates existing exposures. A ski jumper doesn’t train exclusively quads; a balanced portfolio can’t load up on highly correlated trades.
- Planning for failure
No investor is right all the time. In fact, many successful investors win on less than half their trades. A strategy that makes +2% on winners and loses only –1% on losers can be highly profitable even with a 40% success rate. This contradicts almost every other profession: you wouldn’t stay in work long as a doctor or pilot with a 60% failure rate. But in investing, process beats hit‑rate.
- Managing the psychology
A run of losses - even small, controlled ones - can be mentally taxing. Athletes work hard on visualisation, resilience, and performance under stress. Fund managers do the same. We spend far more time “training” ourselves than many might assume improving idea generation, enforcing exit discipline, and learning to distinguish short‑term noise from genuine signal.
Ultimately, the goal is simple: maximise the role of skill, minimise the role of luck.
