Humans have tremendous capacity to grow, but we often expect growth to be painless. However, anything worthwhile has a price. While this is not a novel thought, as life accelerates, we should revisit classic principles more frequently.
Perhaps now is a good time to think back to who you were three or five years ago and compare that person to who you are today. For myself, two key things come to the fore.
Firstly, what would have seemed insurmountable in the past, comes quite naturally now. Importantly, the most difficult intervals (long or short) correlate with greater growth.
Secondly, areas with the least growth correlate with pain avoidance (sticking to comfort zones). Here, hard questions have to be asked because it is easy to desire growth, but just as easy to avoid the prerequisite pain.
However, this is not a call to “embrace the pain”. I know myself and I am unlikely to ever achieve the stoic acceptance that such sayings suggest (it is far more probable that I require a weekly venting session). Nevertheless, it reminds me to set correct expectations when I want to achieve something worthwhile.
From an investing perspective, this classic principle also reminds us of a few things:
Firstly, a management team which never faced difficulties is not equipped to deal with an unexpected crisis. Relatedly, management that recently dealt successfully with myriad challenges has a reasonable chance of executing a growth plan. This explains both why growth momentum can falter without warning and why management teams with successful turnarounds in the rearview mirror may continue to outperform.
Secondly, growth stories with the biggest risk are those that have been too fast and too smooth. A company that has seemingly vanquished everything in its path is often a business with weak risk management. Serial acquirers and business reorganisers often fall into this category: management starts to focus on a shopping spree for deals rather than safeguarding the homebase. Profits that were grinded upwards are far more likely to last.
Thirdly, anything worthwhile requires effort. Over time, numerous tools have emerged that purport to “democratise investing”. Often what is being sold is the idea that one can achieve the same results as those who have been willing to undergo growth pains without making the same sacrifices. However, there is no shortcut to becoming an intelligent investor. While a small group of experienced investors may wield these “democratic” tools with great success, novices lack the ability to assess whether a tool is appropriate in the first place. We therefore need to be willing to invest in our future and accept the accompanying pain to make the most of available opportunities.
While our first instinct around pain and frustration is to search for an easier alternative, it is helpful to realise that these are symptoms of growth. If we can only bear in mind that the outcome could be something very much worthwhile, we might accept the diagnosis of growing pains far more easily.
“Growth is painful. Change is painful. But nothing is as painful as staying stuck somewhere you don’t belong.” – Mandy Hale