 With the Australian Open officially wrapped up and tennis season in full swing, I thought I would take some time to write about the sport of tennis. If you caught some clips of the Aussie Open the past few weeks (or have seen Break Point on Netflix), you’ve glimpsed the emotional weight tennis players carry. Tennis is brutal: one missed shot, one lapse in focus, and the momentum can completely flip. Unlike most sports, players can’t receive hands-on coaching during a match. They’re out on an island, forced to manage nerves and emotions with little help. A single crack can spiral into double-faults, missed opportunities, and frustrated glares toward the player box. One of the clearest displays of this dynamic came in the 2021 French Open final. I was fortunate enough to watch it live. Underdog Stefanos Tsitsipas stormed to a two-set lead over world number one Novak Djokovic, just one set away from his first Grand Slam title. Then the pressure hit. His serve faltered, unforced errors piled up, and the unraveling began. Djokovic? Calm. Methodical. Mentally unshaken. Three sets later, the trophy belonged to the Serbian superstar. Djokovic’s victory and career are a masterclass in what separates short-term brilliance from lasting greatness: the ability to stay mentally grounded when the stakes are highest. The Investor Parallel The best investors aren’t so different from the best athletes (mentally speaking, obviously). In both arenas, emotion is the silent opponent. The difference between elite performance and painful collapse often comes down to composure under pressure. We all know in theory that we should “stick to the plan.” In practice? When markets plunge or soar irrationally, many of us chase performance or flee risk at the worst possible moments. I still remember the calls in mid-March of 2020, when investors wanted to liquidate all stock exposure to avoid the “imminent” collapse of risk assets. The market bottomed just days later. Morningstar research found that from 2013 to 2022, the average mutual fund returned 7.7% annually, but the average investor in those funds earned only 6.0%.¹ That 1.7-point “behavior gap” reflects the cost of bad timing decisions. It gets worse with volatility. Investors in sector equity funds, like technology or energy, missed out on more than 4 percentage points annually due to poor timing.² Even broader asset classes showed the same trend: the more volatile the fund, the bigger the gap between investment returns and average investor returns.² The lesson? Lean into your investment plan when others are abandoning theirs. Those who keep their impulses in check, especially during volatility, tend to earn more than their peers. Building Your Own Systems Just as pro athletes rely on routines, rituals, and coaches, long-term investors need behavioral guardrails to avoid breaking down in emotional markets. Here are a few:
Keep in mind, not every system works for everyone. The goal is to find the guardrails that fit your style, so you don’t crack under pressure. Final Thought The market has been calm over the last year, but volatility is inevitable. That makes this lesson even more important to remember. The next time you face an emotionally charged market, imagine you’re Novak Djokovic playing a Grand Slam final. Will you let your nerves push you into double-faults and unforced errors? Or will you stay resilient, trust your preparation, and let your game plan carry you through? More Reading: Budgeting Sucks. Do It Anyway. When Fear Becomes an Asset Class: Why Gold is Soaring Status Quo Bias: When the Market You Know Becomes the Market You Expect References: ¹ Amy C. Arnott, “Fund Investors Who Kept It Simple Captured More Return,” Morningstar, March 21, 2023. https://www.morningstar.com/personal-finance/fund-investors-who-kept-it-simple-captured-more-return ² Same source as above.
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