My housing complex is very active and we have an annual function that consists of over 40 different competitions between 4 teams and 100 participants in sports and performing arts. The team with the highest cumulative points gets a trophy and a chance to taunt their friends in rival teams for the next two months (trophy is cool but taunting… Mesmerizing!)

I was supposed to represent my team in a triathlon because there was no one in my age group up for it. To be honest, we had written off the points of this race a few days ago when we had to submit the participant list. When it comes to sprinting, I’m definitely not the fastest guys around and I was up against 3 other sprinters who could easily beat me in speed and stamina. They were fitter in every respect.

The objective was simple, start with an end to end sprint followed by a four limb race (run with both, your arms and feet) and cycle your way to the finish line. The positive for me here was that we had written off this race. So I was under no pressure.

The race started on the gunshot and the other three had a head-start on me in the very first 50 MTRS. But when the race ended, I finished second! (How?!)

Here’s what happened in the race. The other three were trying at the end of their tether and exceeding their capacity in order to win. Yes, there was also a little bit of ego involved among them as this was not a routine race to win. Halfway through the four limb race, one of them fell and injured himself while the other used the wrong technique due to which the officials asked him to start over this portion. The result was loss of lead over others, stamina and concentration. All this happened while I cleared this patch like a turtle without mistakes.

Before the race, I just had one thing in mind, ‘Be professional and finish the race’. I know my speed and stamina, and no matter how much I tried to exceed my limitations, I wouldn’t have been able to overtake my competitors. I had to respect my traits and work accordingly.

So many things could’ve gone wrong if I had tried to go for win like they did. Firstly, the mental pressure to perform which would’ve later translated into physical torture on my own body to breakthrough my own barriers. Secondly, the probability of errors I would’ve made like my competitors did. Lastly, the risk of not completing the race altogether due to injury (which would have also affected the other competitions I was supposed to play later, an absolute disaster it’d have been for me and my team).

This is the same approach we keep in our business and investments.

‘It is not always important to earn the maximum returns, but it’s important to earn maximum returns taking minimum risks.’

You come across a lot of people around you claiming how well and how soon they earned using a particular strategy or following a particular person and also feel envious about those achievements (it’s okay, it’s human). If that person is from your close circle, he may even reprimand you for not following him and makes you feel that this is the most tempting thing and you want to dive in too. But should you really?

In the words of the legendary Warren Buffett, “You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right – that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else.”

If a certain amount or return covers your requirements and keeps your position stable, you should continue to maintain the balance (and let compounding do its job). You have to ‘be professional and finish the race’ rather than running behind getting the highest number against your name, throwing the balance for a toss in the process.

How do you reduce your risks? You ask. It’s simple. You have to first know what you know. You need to understand your strengths and weaknesses, respect them and build an environment around it. Anything outside the boundaries of your environment is not for you, no matter how green the grass is.

By this, I do not intend to say that you have to find happiness in earning less return. You have to decide for yourself ‘how much is too much’ or take help of someone you trust to help you figure out, and cling to your decision. If you can get that ‘too much’ yourself, you don’t need to look elsewhere. However, if you feel you require external help, meet a lot of people who can do the job for you and choose the one that makes you feel the most secure about it. If you have hired someone to invest on your behalf, see how confident and clear they are in their approach and whether they fit your philosophy.

Would you, as an investor, go behind a person who offers maximum returns (ignoring the risk factors) or who gives reasonable returns respecting the risks?

You can write to us at siddharth@indigenousinvestors.com or jinay@indigenousinvestors.com for further discussions.