In 2019, I was in the best shape of my life. In 2020, I nearly died from a freak heart complication. What helped? Preparation.
Prior to being hospitalized, I had been working out consistently, pushing myself, hitting 5 days a week almost every week. Just a couple years before, I had run a half marathon, and had maintained cardio and built muscle. Even on a trip overseas, a friend and I made time to hit the gym.
But a viral infection led to fluid buildup around my heart, until the whole thing squeezed my lungs and caused me to collapse. Thankfully, a team of highly trained physicians and nurses in Kansas City drained the fluid, and eventually, I was able to return to full health.
This whole experience made me think: What’s the best way to face an unforeseen health challenge? Face it in the best condition possible.
In money and business, you can rarely predict all the things that can go wrong. You can’t predict when your founder will have a stroke, when a supply chain bottleneck will double your input costs, or when a virus will prompt governments to shut down the world.
What’s the best way to prepare for these, when you can’t even see them coming? Simple. Be in as solid a financial position as possible when they arrive. Note: we said simple, not easy. There is a difference.
It’s easy to invest all your money when the market is on a hot streak. It’s simple to keep back a prudent amount of cash in case the winds change (and they will). It’s easy to sell your positions when the whole market seems like it’s on a losing streak anyway. It’s simple to allocate cash conservatively so that when the market turns, you’re ready to capture good deals, not run for the hills. It’s easy to get sucked into recency bias, anchoring bias, the bandwagon effect, or any number of perception-clouding phenomena. It’s simple (and oh so hard) to admit that you don’t know everything, and to humbly lean on the wisdom of others.
The investors we knew in 2008 and 2020 that did the best job weathering the storms were those that came into those challenging times in the best financial shape of their careers. Sufficient cash (not invested), well-managed expense (both personally and in their businesses), and perhaps most importantly, a well-disciplined mind to know that, when the rest of the world was going crazy, they just needed a little patience and courage to come through the other side even better than they entered it.
You cannot predict these crazy times any more than I could have predicted my 2am ambulance ride. But you can prepare for them by getting in shape, and building the financial and emotional “muscles” that will help you survive and ultimately thrive.