Game On
by Steve Visscher, Mawer Investment Management
I love hockey. Those who know me well, know this about me. So itās only fitting to write about hockey on the eve of the NHL season. Too much has been written about lockouts and collective bargaining agreements. To me, this labour dispute seemed like wealthy players and even wealthier owners fighting over the hard-earned money of the fans. I also canāt imagine any readers being too interested in my Stanley Cup predictions. Instead, I thought we might explore what we can learn about investing from the greatest hockey player ever ā Wayne Gretzky.
We have all heard stories of athletes or celebrities who earn millions of dollars in their careers, and then go broke. Wayne Gretzky, by contrast, has achieved considerable financial success after his illustrious playing career. How did he avoid the pitfalls that have plagued others? I wondered this myself as I read an article penned by the Great One himself in the latest issue of MoneySense magazine. As it turns out, Gretzky attributed his success to a number of the lessons and good advice that he received along the way, and he shared much of this advice with readers in the article. Of course, I couldnāt help but notice this advice applied not just to young athletes, but to all investors.
Think Long-Term
Gretzky learned one of his most important lessons at a very young age. As the ink dried on his first signing bonus, Gretzky invested these funds to provide income for his retirement. He admits that it was hard as a teenager to fathom what life would look like in his 50s or 60s, but his father convinced him to invest for his future. Today, Gretzky is thankful that he adopted this long-term perspective at such a young age. That lesson pertains to all of us.
Seek Professional Guidance
Over the course of his career, Gretzky was pitched many different business proposals. But he recognized his limitations. He chose to focus on his hockey career, and then surrounded himself with other professionals to identify which ventures were attractive and which were foolhardy. He took a similar philosophy with investing. Rather than choose his own securities, he hired professional money managers to build his portfolio.
Minimize Risk
Gretzkyās final lesson was to minimize his risk. Even after a business venture or investment was thoroughly scrutinized by his team of professionals, he was careful not to invest more than 10% of his wealth in any single venture. That way, he would remain adequately diversified and avoid devastating losses. Although many readers arenāt in the position to launch restaurants and wineries as Gretzky has, he noted this advice is equally applicable to those who invest too heavily in a single stock.
For those who wish to read the full article, it is featured in the December/January issue of MoneySense magazine. The article was candid, entertaining, and full of great adviceā¦from the Great One.
Steven Visscher
Copyright Ā© Mawer Investment Management
