The Process

2/20/2023

Football has entered its seasonal dormancy. The Super Bowl carnival is behind us, and the celebrations in Athens, Georgia, are long since over. However, college players will soon begin spring practice. For the football squad of Alabama, that, of course, means the chance for Nick Saban to inculcate ‘The Process’ into a new group of young men.

The Process is Saban’s attempt to bring the serenity prayer to college football. The concept seeks absolute commitment to the actions that Saban and his football players can control. Central is the belief that good habits instilled through persistent instruction will produce reliable performance in real competition. Moreover, Saban hopes The Process will hold at bay the noise of the outside world and the corrupting influence of victories and defeats. Perhaps the key to the impact of The Process is the belief that, once it takes hold during times of relative calm, it will prove effective during times of stress.

The Process can be applied to areas far beyond football. Many of our actions cannot be guaranteed to bring the intended result. Even a carefully planned trip through Atlanta traffic is unpredictable, with or without Waze. One of the most productive areas for applying The Process philosophy is through an investment strategy. Short-term movements in asset prices are often counterintuitive, confusing, or even downright distressing. Market pontificators will get their paycheck no matter the outcome of their forecasts, but investors are left holding the bag if they act upon these predictions.

While not quite dormant, investment markets do seem to be in a period of sluggishness. The steady drumbeat of market commentary continues, but the outlook remains highly uncertain. Economic forecasts range widely, not least because of the different views of the outlook for inflation between Wall Street and the Fed.

This feels like a good time for each of us to review whether we should apply the discipline of The Process to our own investment approaches. The questions for developing our individual Process are simple. For example, what are our long-term goals; how much cash do we need from our investment portfolio in the short term; what is our appetite for risk; how much risk can we afford to take? Answering such questions enables us to develop an investment strategy. The hard part comes next. We must commit to that strategy in a way that allows us to stay calm and methodical when the markets become volatile.

Of course, for some of us, the markets provide opportunities to indulge in trying to find the latest ‘shiny investment object.’ Such an approach flies in the face of Warren Buffet’s advice: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

As the markets bumble along to some possible future clarity, the seasoned investor will be committed to their own Process. That is the only way to keep our heads when all about us are losing theirs and blaming it on others (with apologies to Rudyard Kipling).

Richard Rushton