Strength Training + Investing
Long-time readers will be familiar with the constant parallels I’ve drawn between powerlifting and investing. For new readers, the origin story goes that the only reason I learned about value investing is because I was looking for a career field in business similar to powerlifting. This week, a few ideas along the parallels of these two universes I thought about were Yarak and the Margin of Safety.
Yarak is a falconry term of Persian origin that refers to a mentality to hunt. A state when the animal is starved and how that increases its focus to hunt and kill its prey. It’s a term Dan John, an elite strength coach, mentioned for incorporating fasting into a strength athlete’s daily routine. It can be a tricky system to juggle when training heavy but the principle behind it is to create a period of intense focus using physiologically constrained states. I’ve actually found I can train heavy while in a fasted state but the volume of squats and deadlifts need to be massaged accordingly. Creating stiffness in one’s core and spine has been made easier when training in a fasted state though, creating an optimal condition for strength training.
I subsequently heard Jake Taylor of Farnam Street Investments mention cultivating this state in his investment process on the Value After Hours podcast. Now, any professional field can benefit from cultivating such a state of intense focus. I merely found it more than a coincidence to hear two people I respect from the separate worlds of strength training and investing talk about the same principle applied to activities that share the trait of being a lonely profession where it’s a constant battle with the self.
Margin of safety is another common term in investing. Particularly in the field of value investing where the intrinsic value of a business is a major focus of the thesis. Heck, there is Seth Klarman’s book that seems to have claimed it for the investing community. Though the common use of a bridge analogy to teach margin of safety makes me think the origin resides in structural engineering (i.e. the factor of safety), it’s also utilized in strength training.
A foundation of strength training is the use of submaximal weight. Contrary to popular belief, you don’t get stronger maxing out your weight all the time. An athlete needs to train his neurology to build strength and the best way to train one’s central nervous system is to repeat the competition exercises over and over again with near-perfect form. For this to be possible, one can’t do anything but use submaximal weight. This means an athlete needs to always train with a margin of safety in their training. As soon as I heard Stu McGill, an expert on spine mechanics, utilize the term, fireworks went off in my head.
One interpretation could be that investing and powerlifting are both very similar so the models inherent in each other could help train in another. Another interpretation could be that these two fields are mere extensions of the human condition and basic principles of margin of safety and yarak are applicable in any field where one is working towards mastery.
It might apply more broadly to anything that benefits from compounding. Look at the basic physiology for forming habits! One of the pillars of building habits that last is to make the daily goals really easy to achieve (i.e. applying a margin of safety to do it perfectly over and over again!). Another pillar of building habits is to do it first thing in the morning (i.e. you may inevitably be in a fasted state where you are alert, hence in yarak).
Who knows what more truths from investing and powerlifting can transfer over to performance in other areas?