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How to survive equity volatility: Lessons from Nadal and Federer…

Stock Market | Published on Sep 19th 2017 | Comment(s) 0
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When Rafael Nadal beat Kevin Anderson at the US Open on 11th September 2017, it was the fourth occasion when the Grand Slam (Australian Open, French Open, Wimbledon and US Open) was shared between Federer and Nadal. Previously, the Grand Slam was shared between Nadal and Federer in 2006, 2007 and 2010. What is really astonishing is that two outstanding champions of the game have repeated the feat after a gap of 7 years.

What is it that sets Nadal and Federer apart as the greatest rivalry in the history of tennis. Of course, there is talent; there is commitment and there is perseverance. But the way Federer and Nadal have handled the ups and downs of their professional challenges is largely akin to what every successful investor needs to do. Beating the challenge of market volatility and uncertainty and coming out a winner is what investing is all about. Here are 6 things that every trader and investor can learn from Nadal and Federer…

  • At the end of the day, nothing beats self-belief…

If there are two persons who embody this attribute it is Federer and Nadal. Be it bouncing back from injuries, bouncing back from poor form or bouncing back from sheer bad luck; these two have done it all. And their record speaks for itself. It has been possible only because of an undying self-belief that both Nadal and Federer have possessed. That is what surviving the investing game is ultimately about. You need to believe in your ability to sustain in the game and have the conviction that if you keep working and keep learning, you will hit the right notes in the stock market.

  • Never underestimate your adversary but learn from them…

That is a common trait that you will find in Nadal and Federer. An amazing level of humility is backed by an unflinching urge to learn from the strengths of opponents. Remember, that is what will set your apart in investing and in trading. But who is your adversary? Your first adversary is the market. You need to be humble enough to acknowledge that you can never beat the market consistently. You also need to admit that the market is not right or wrong and it is you who need to learn to play around the market. You can also look at your adversary as your competition. When another trader or investor is consistently doing better than you, smartness lies in trying to understand what that person is doing better.

  • Perfection and expertise is constantly evolving…

If you want to become a champion you got to realize that perfection is work-in-progress (WIP). Nadal after 10 French Open titles and Federer after 8 Wimbledon titles continue to be students of the game. During the US Open semi-finals, the way Nadal retro-fitted his game is a fabulous example of how to handle a volatile opponent. In equity markets nobody is born with the skills of a Warren Buffett or Peter Lynch. You have to evolve as a trader over a period of time. That is a key lesson for investors to learn from Nadal and Federer.

  • Play your own game and play to win…

Both Federer and Nadal have been flexible to adapt to the changing style of the game but have never given up on their core strengths. Both Federer and Nadal have an insatiable appetite to win championships. You cannot achieve those heights without that kind of hunger within you. The same applies when you trade or invest. It is easy to get distracted by the vagaries of the market or the actions of competition. Even as you learn, you need to play the market to your strengths. Above all, never forget that you are in the market to win and make money. So you must be right more often and more profoundly than being wrong.

  • The most eloquent test of success is longevity…

Had Federer and Nadal just shown flashes of brilliance, they would have been long forgotten. They would not be the kind of benchmarks that they are today. The answer lies in their longevity. It comes from a belief that age does not matter and your best is yet to come. That is what your investment success is all about. It is about believing that your best is yet to come. It is about believing that you are going to be around for many more years to come. It is about the belief that you can continue to positively surprise yourself.

  • If you want to be the best, learn to punch above your weight…

That is what the story of Nadal and Federer has always been about. Both the champions have set incredibly high standards in clay and grass respectively. It is hard to fathom and much harder to emulate. What is common between Nadal and Federer? Both were willing to take the risk and punch above their weight. Both have proved that limitations are in the mind and not in the body. That is true of investing and trading too. You got to take the big calculated risks in your portfolio. Adopting a safe and incremental approach will not take you much beyond mediocrity.

Both Federer and Nadal offer some invaluable lessons for traders and investors. Handling success in a volatile environment is a lot like trying to be consistently successful in a volatile market. Nadal and Federer have surely shown the way!




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