investment performance

How Living a Healthy Life Will Improve Your Investment Performance

Erik Financial Education, Markets, Thoughts of a Mastermind 9 Comments

We have a guest post today from Troy who runs a hedge fund in Austraila and blogs about his historical market research on his website MarketHistory.org.

Everyone talks about the importance of budgeting and cutting down on expenses with regards to getting wealthy. If you think of your life as a business, adhering to a strict budget is akin to rigorous cost control. While it’s important to not wasting money on non-essentials, I believe that we should try to maximize the “revenue” side of our life instead of minimizing the cost side. Theoretically speaking, you can only cut the costs side down to $0, while you can increase the revenues side infinitely.investment performance

As you work, save, and invest over the years, your investment income from real estate or stocks will perhaps one day become greater than your income from your full time job. That being said, what if you aren’t healthy enough to enjoy your investment income!

I want to share with you an aspect of investing many people don’t talk about: physical and mental health. Investing is ultimately a game of decision making. Your health will impact your decision making capabilities. For example, someone who has poor health will probably become easily frustrated in his/her life. This will result in poor decision making skills when things turn sour. Instead of making a rational decision about whether to sell an asset when the market turns down, the individual might make an irrational decision based on his/her emotions instead. Living a healthy lifestyle via healthy dining and abundant exercise provides many benefits to investors.

Benefits of Being Healthy

A healthy body is a temple for a healthy mind. Scientific studies show that exercise trains your mind to think quicker and analyze situations in more detail. It also improves your memory – you don’t need to waste time on finding studies/research that you’ve done in the past.

Eating delicious, nutritious food makes you happier by releasing hormones called endorphins. People who are happier are also more optimistic in life. Since the stock market goes up more than it goes down, you need to have an optimistic bullish bias if you are to succeed in the stock market. Perma-pessimists inevitably get killed in stocks.

In addition, investing is a long term game. Warren Buffett said you have to treat your body as if it were the only car you have in your lifetime. You need to change the oil frequently, take it to the repair shop, and run it every once in a while (or else the engine will die).

People who live healthier lifestyles live longer than those who don’t. You can just imagine the final difference in wealth between someone who dies at 65 and someone who dies at 85. The person who dies at 85 benefits from an additional 20 years of compounding!

Investing isn’t all about money. The purpose of money is so that you can have a good quality of life. Healthy living isn’t only beneficial for your investment decision skills, it also leads to a markedly improved quality of life.

My Healthy Lifestyle

My lifestyle revolves around 4 tenets.

  1. Eat vegetables/fruits and foods that are high in protein.
  2. Exercise regularly.
  3. Take a lot of mini-vacations.
  4. Wake up early and sleep early.

I recognize that not everyone can follow my lifestyle. Being young and single, I don’t have many of the constraints that other adults have.

I believe in spending modestly but not too modestly. This means I don’t tighten my belt too strictly when it comes to groceries. Although the monetary benefits of having a tight budget are obvious, there is no way to be “cheap” in when trying to live a balanced life and to eat healthy.

Start in the Kitchen

My diet is high on vegetables and protein while low on carbs. In addition, I prefer organic, natural, and low salt foods. I stay away from frozen foods. While a diet rich in carbs such as pasta/bread is definitely cheaper, I don’t eat many carbs because they aren’t the best for me. Here in Sydney, a loaf of wholewheat bread is $3 while a single head of lettuce is $3.50 (Sydney is ridiculously expensive)!

By eating healthy foods I feel better, have more energy, and think more clearly. Sugar-rich foods may provide the body with an immediate boost in energy, but that energy drops precipitously after a few hours. Meanwhile, vegetables and fruits cause energy levels to rise and remain elevated for many hours, after which it declines rather slowly. It is important for an investor to stay sharp at all times.

I find I’m always hungry when I’m investing and working. This is a common problem that many hedge fund managers, traders, and professional investors have (that’s why so many hedge fund managers are overweight). Eating too many sugary foods or carbs makes you feel bloated and slightly dizzy, thereby worsening your investment decision making skills. That’s why I’ll usually eat fruits while I’m working. Eating while working acts as a good semi-distraction and relieves stress.

While I spend a lot more on groceries than most people, my expenditures are far from extravagant. I cut down on the non-essentials in life to save more money. I don’t eat out (which for a person of my appetite can become ridiculously expensive!) Another frugal thing I do is I still use an old phone instead of keeping up to date with every iPhone refresh! It’s all a matter of spending the same amount of money but improving your quality of life.

Working Out

In addition, I work out a lot. I lift weights for 50 minutes and run on a treadmill for 20 minutes 5 times a week in my home gym. Science shows that consistent exercise improves your memory and quickens your decision making skills. It also improves your ability to think rationally. You’ll probably make poor investment decisions after you’ve had a tough day at the office. Working out is a great way to release stress because your body produces more feel-good hormones called endorphins.

Mini-Vacations

I go on a lot of mini-vacations. It doesn’t have to be a big multi-week trip that includes 10+ hour flights (flying to anywhere from Australia takes forever). It might just be a day trip to a remote beach (you can find pictures of the surf on my blog posts). Getting out in the world has 2 main benefits for investors.

  1. It broadens your view of the world! I have gained so much knowledge that aids my investing. For example, I’ve learned a lot about the economies of different states in the U.S. and different countries just by talking to taxi drivers.
  2. It does miracles to your body. A vacation is a nice break from everyday life. Certain investments decisions are hard to make because there are too many factors to consider. When I come back from vacation, my thinking becomes a lot more focused. Thus I can more easily strip away the factors that don’t matter and focus on the factors that are important to the particular investment.

Early to bed, Early to Rise!

I wake up early and sleep early (I understand this is hard for adults with kids). Certain studies show that the body starts to regenerate after 9 pm and stops regenerating by 5-6am. However, this regeneration occurs at a much faster rate if you’re sleeping during this time. That’s why I usually sleep from 9:30 pm – 5 am.

“Early to bed, early to rise, makes a man healthy, wealthy, and wise!” – Benjamin Franklin

Conclusion

If you are looking to maximize your returns in the stock market, it might be best to supplement your market research with some gym time and time in the kitchen! Start trying to get to bed a little earlier and you will reap the benefits!

Troy is an investor who shares his thoughts on stocks, commodities and currencies at MarketHistory.org. Click here to check out his summary of financial history.

Comments 9

  1. Great advice Troy. I have always been an advocate for physical and financial healthy. Having two kids myself and limited free time to do other things, sleeping more is definitely a huge challenge. However I do see the benefits of keeping your body and mind healthy.

  2. Great article, Troy. Your four tenets around which you structure your life should be universal. No matter what your life may look like, it is important to find the necessary time to take care of our body and mind.

    1. I started to spend a little less time on my workouts recently, just because Im’ getting older. Haha it’s not like my university days anymore when I could workout every day of the week and not feel sore the next day.

  3. Troy, this is a very thoughtful post. Thanks for sharing your wisdom here. I couldn’t agree more that the physical and mental health of a person directly affects their financial health. It’s the entire basis for my blog. So, it’s something I believe very strongly in and your fantastic article just further validates that concept.

    Question for you – do you track your performance in such a way that you know how much better you do as a result of the actions you cite here? I’d be interested to know that after a workout, how much better did you do when making the very next investment decision? Or have you ever tested your investment decision-making after eating a sugary snack vs a healthy one? I don’t know. It seems like it would be an interesting case study.

    Anyway, thanks again for sharing! I’ve always wanted to visit Australia, but it wouldn’t exactly be a mini vacation here for me in Gettysburg, Pennsylvania in the US! It is on the bucket list

  4. You are crushing the guest posts Troy!!!

    I definitely work out enough, usually 4x a week of intense weights and cardio but I definitely need to clean up my diet. I definitely don’t eat nearly as many fruits and veggies as I should along with getting rid of some of the processed sugar. I’m trying though 🙂

    1. It’s really hard. It took me a while of back-and-forth dieting to get to where I am now. I read somewhere that eating sugar literally sets of explosions of neural pulses in our brain. We’re programmed to like carbs.

  5. I track it more in terms of improved productivity. It’s just really hard to quantify. How do you quantify “decision making is much faster when you have a clear head?”

  6. I’ve been trying to have smoothies for dinner a couple nights a week. I’ll usually use banana as the base, then add whatever other fruits, veggies, oats, etc. we have available. It’s just a matter of being used to control portions and not eating the way I used to, but instead smaller size and smaller bites

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