5 Investing Lessons Born of Defying Reason

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What do "reasonable" people do? I guess I'm not really that sure a lot of the time, but I know that one thing most reasonable people wouldn't want to do is run 21 miles down into the Grand Canyon, up and out the other side, and then run the same 21 miles back. In a day.

And yet I did exactly that this past weekend.

What does an obviously masochistic adventure in a beautiful National Park have to do with investing? I'm glad you asked, because I think there are a few lessons that I can pull out of the grueling trip.

1) Keep the long-term in focus.
Whether you're running through the Grand Canyon or simply there to visit the natural wonder, you almost can't help but be struck by the power of little changes that take place over long periods of time. The massive canyon itself was formed by the water from the Colorado River very, very, very slowly wearing down layers of rock.

Obviously, our portfolios don't have millions of years to work their magic, but keeping the longer-term in mind can be hugely beneficial for us Foolish investors.

Through his "The Extraordinary Power of Dividends" series, my fellow Fool Morgan Housel has highlighted the incredible things that can happen when you mix dividends and time together in your portfolio. It can be easy to look at a stock like 3M (NYS: MMM) and assume that its 2.7% dividend won't do much for you. But the company's dividend-paying reliability and the growth of its payout have rewarded investors big time over the past few decades.

Even Altria (NYS: MO) , which has a relatively high current dividend yield of 6%, could be easily passed over by investors looking for the next lottery-ticket stock. But largely due to the company's dividends, Altria has been one of the best performing stocks, period, over the past few decades.

2) Find good guides.
There are myriad challenges to tackle when trying to run across the Grand Canyon -- from access to water to negotiating midday heat and finding your way. For my trip, I was able to link up with a very experienced and knowledgeable runner who was doing the crossing for the seventh time. Also in my group was a runner who had not only done the crossing a few times already, but was a former Grand Canyon tour guide.

One of the truly great things about the Foolish community is that it's just that, a community. For beginning investors that are looking to take their first step into investing (The Motley Fool's CAPS is a great place to start!), those looking to step up from practice portfolios to real money, those bumping up from investing a chunk of money to their whole retirement account, and everyone over, above, and in between, there are experienced investors out there that will be more than happy to help you and point out pitfalls to avoid.

Can you skip that and blaze a trail completely on your own? Of course, but let me put it this way: If you screw up your water situation on a Grand Canyon crossing, you may not get another chance to do it right. Likewise, if you get in over your head trying to invest your retirement portfolio, one major mistake could make your golden years look decidedly leaden.

3) Plan well and trust your plan.
One of the challenges of running for that many hours is that you drastically deplete your body's sodium levels through sweating. If your sodium/water balance gets too far out of whack it can cause serious problems, so it's important to replace that sodium.

Prior to the trip I did my research and figured out exactly how much I'd need. Then I proceeded to not follow my planning. The result was a lost half hour during the run as I had to catch up on sodium and wait out a bout of nausea.

All of the research and learning about investing does you absolutely no good if, when push comes to shove, you don't follow what you've learned.

4) Keep it all in perspective.
If there's ever a time to be reminded of just how small you are against the might of nature, it's at the Grand Canyon. Whether you're standing at the rim, looking down over the side, or deep in the canyon looking up at the towering canyon walls, it's hard not to feel like a teeny, tiny speck of dust in Mother Nature's palm.

Your investment portfolio is very important. It's your retirement. It's your kids' education. It's a house someday. But at the same time, life is much bigger than the performance of The Dow Jones Industrial Average (INDEX: ^DJI).

And in case you think this is simply a hippy-dippy sentiment here, banish the thought! Some of the biggest slip-ups an investor can make come from behavioral quirks. Many of these quirks -- overconfidence, asymmetric risk aversion, confirmation bias, and heuristic availability, to name a few -- can be drastically exacerbated by feelings like pride, fear, and greed. And I'd wager heavily that those feelings are much more prevalent for those investors that allow their portfolios to eclipse the bigger picture.

5) It's an adventure.
To many people, running the Grand Canyon likely sounds crazy, awful, or just plain stupid. I love to run, though, so for me it was an amazing adventure.

In a similar way, to many people, researching and managing investments sounds like horrible drudgery. If that's the case for you, then there are people you can hire to take over the task for you. If, however, you see investing as an enjoyable pursuit, then meeting challenges, learning, and exploring are an adventure to be tackled.

For those intrepid investing adventurers looking for the next waypoint on their journey, a great stop is The Motley Fool's new free report "11 Rock-Solid Dividend Stocks," which offers up 11 stocks that could give your portfolio serious long-term income power.

At the time this article was published The Motley Fool owns shares of Altria Group. Motley Fool newsletter services have recommended buying shares of 3M. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer owns shares of 3M, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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