By: Tim Bennett
16.05.2019
16.05.2019
What can investors learn from Henry Winkler (a.k.a. “The Fonz”?). Quite a lot, says Tim Bennett in this week’s video.
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Three lessons for investors from “The Fonz”
Former Happy Days star, Henry Winkler, may not seem like an obvious source of inspiration for investors. However, his three core principles for a successful life will also help you survive and thrive long-term in the stock market. Here is a snapshot.
Background
Anyone aged over about 40 will remember Happy Days and the key role played by Henry Winkler as The Fonz. However, what many people do not know is quite what a challenge he faced to land the role and then the challenges he faced getting any other part subsequently. Undeterred, this master of reinvention went on to forge a successful career in publishing before returning to mainstream acting and landing an Emmy at the age of 73.
How did he do it? Here are his words;
There are lessons here for aspiring actors and writers, naturally. I also think investors could do worse than remember his three core tenets.
Tenacity
For the first 27 years of his life, until he landed the role of The Fonz, Winkler was largely written off. His dyslexia was confused with laziness and stupidity. Nonetheless his sheer persistence paid off once when he got his break (he couldn’t learn lines so had to improvise at audition) and later when he turned to authoring a hugely successful series of children’s books.
Investors can take away a lot here. Tenacity, and the ability to stick with a plan whilst riding the inevitable bumps that come with stock market investing, are key skills.
For proof, take a look at this chart of the S&P 500;
The lumps and bumps suffered along the way to long-term gains are clear. However, without tenacity many investors will fall by the wayside and leave the market disappointed.
Empathy
Imagine Happy Days without The Fonz, it’s best loved character. Yet Winkler so nearly didn’t land any acting role because no-one until that audition could see past his slightly awkward manner and seeming inability to learn lines. It took a producer who was prepared to go out on a limb to get him in – the rest is history.
For investors, the lesson here is that in order to beat the market, you can’t simply follow it and assume the crowd is right. An ability to take a calculated risk is important. However, to do that you also need to be able to read the mood of the crowd – for stock market investors that means an ability to gauge sentiment and judge where we might be within a current cycle. Only by correctly analysing the mood of the market and then using that knowledge to spot hidden gems, will you ever make outsized long-term returns.
So, how to measure mood? Well, it can be done – here are three ways;
Trading volumes, for example, can reveal how enthusiastically the market is adopting an idea and which way sentiment might go next. Meanwhile volatility trends can expose market overconfidence or extreme nervousness and signal when one may become the other. Finally, there are many sentiment indicators that can show an investor whether other investors and bullish, bearish or neutral.
Gratitude
As Winkler puts it;
Warren Buffett urged investors to bet against the crowd by being “greedy when others are fearful”. However, there is a limit to how far greed will get you and taken to far it can even be dangerous. The key is to set goals, design a plan around them and then stick to it. In other words, be grateful as well as greedy.
