John Wooden’s Pyramid of Success
From Basketball to Investing
Investing seems to be a mystery to many people. It doesn’t have to be if you look at investing as a game. Think of investing as a game and remember that corporations have game plans. Structure your game like this:
Your team may be your family or a group of friends. The market is your opponent.
Buying is considered the offense and selling
is considered the defense. For the best results, you should eventually be good at both.
Your investment plan is your play book, which prepares you for both rising and falling markets.
Winning is defined as profits and losing is defined as losses.
Your investment plan is equal to a playbook of strategies for winning. Once you start thinking of investing as game, you can better understand and relate to investing.
When you think of investing like a game, you will realize how important an investment game plan is to your financial success. There are many winning strategies and you will need to decide what works best with your personality and your own financial needs.
Look for the ways that fit your skills and comfort levels. As with most games, you need to control your greed and fear for they are two things that cause people to lose the most.
If you would like to begin to condition yourself for the game, we suggest taking a look at John Wooden’s Pyramid of Success. We have adapted it to investing below.
John Wooden also wrote a book with Bill Sharman (Boston Celtic player and LA Lakers coach), The Wooden Sharman Method, in which they discuss the fact that intensity though hard work and desire will make efficiency second nature. They also write that:
• Decisiveness is a valuable attribute for the execution of fundamentals.
• Each day that you fail to do your best, you lose something you can never get back.
• Patience is important-good things take time.
• When you curb your emotions, you develop poise and self-control, which leads to better performance.
• The more you let outside factors influence your investment plan, the worse you will do.
• Never let a situation or trade or market get the best of you.
• When practicing, set goals for yourself; it helps gauge improvement.
• When role playing, (i.e., buying and selling on paper), setup scenarios for what can happen.
• Know in advance how you would react to different situations. How would you adjust your plan if some event occurred? The way you practice usually determines how well you execute your real rules.
• Learn to do things you do well and don’t try or minimize things you can’t do well.
• Steady, consistent investing gets the results.
• Talk over your specific plan or trades with a knowledgeable friend of fellow investor. They may find strength or weaknesses in you that you might not recognize.
John Wooden’s Pyramid of Success
• Faith in the future
• Faith in yourself
• Faith in your beliefs
• Faith in your investment program
The willingness to allow your plan to work; to learn why you made profits and why you had losses.
Consistency of returns – small, medium and large gains and occasional small losses.
Adjust your plan as the market changes and as you gain experience.
Mentally condition yourself to control your emotions in different situations.
Practice (on paper) buying and selling: write down the date and price of your purchase and the price of your sale to see if you would have had gains or losses. Try to learn why you made or lost money so that you can develop a plan and implement emotional disciplines that work best for you.
Learn to use self-control and discipline to follow the plan you developed.
• Become aware of the many events that could influence your investments for better or worse.
• Be quick to take any actions needed to keep profits and minimize losses. Don’t procrastinate!
Sacrifice your ego; be humble.
Look for other areas of your life, such as sports or games that can help you with your investment plan.
Develop and judge your own investment procedures with checks and balances.
Initiative and Intentness
Take steps to develop a plan that works best for your emotions, time available and interests and then develop the desire to follow it.
Enthusiasm and Optimism
Enthusiasm for the future and optimism that your plan will work well.
Follow your plan regardless of how great, uncertain or bleak things may look.
• Keep emotions under control.
• Don’t let fear, greed, complacency, arrogance, ego and procrastination influence your plan.
Gain knowledge of the investment methods that work best for you and develop the ability to execute the written plan you have developed.
Be prepared to carry out your plan that covers every detail in your methods plan.
Industriousness and Ambitions
There are no substitutes for work and being focused on your objectives.
Worthwhile things come from hard work and careful planning!
By Marcy Pennypincher
“Success is peace of mind, which is a direct result of self-satisfaction in knowing you did your best to become the best that you are capable of becoming.” – John Wooden
I bet you thought that March Madness referred to the NCAA college basketball playoff series. WRONG! March Madness refers to how MAD wives and girlfriends get when their husbands and boyfriends spend weekends glued to the television for the entire month!
While my husband Mark is busy tracking his favorite teams, I decided to read one of his “recommended readings” Coach Wooden’s Pyramid of Success: Building Blocks for a Better Life, written by John Wooden and Jay Carty in 2005. In 2009, even after Wooden’s death, The Sporting News named Wooden (1910 – 1990) the “Greatest Coach of All Time.”
Coach Wooden is one of just three people to have been inducted to the Basketball Hall of Fame as both player and coach and is known for his teachings about success. Mark raves about Coach Wooden’s Pyramid of Success and says it serves as an excellent road map for both life and investing. I wanted to check it out for myself.
Wooden’s Pyramid of Success is featured on pages 14 and 15 of his “Building Blocks” book. He defines several characteristics that can apply to all of us. The foundation’s cornerstones are industriousness (hard work and careful planning) and enthusiasm (love your work). Other recommended traits include self-control (good judgment, common sense and keeping emotions under control), alertness (be watchful, correct any weakness), initiative (the ability to make decisions and think alone), and intentness (stay the course to reach your goal).
The last characteristic, intentness, makes me think of people I have known who, in recent significant market downturns, liquidated their investments when they were priced at or near the bottom. I can sympathize with them…but Mark says that when the market is “on sale,” and it is time to buy. It helps to be conditioned (mental discipline to stay the course) and have faith and patience in your investment strategy so that you don’t respond emotionally to changes in the market.
Wooden’s pyramid includes two building blocks that apply to investing: skill and team spirit. Skill refers to having knowledge, being prepared and covering the details. I know Mark is a fit for the “skill box,” so I feel comfortable relying on his expertise. Team spirit may sound like it applies only to sports, but if you think of it, as relating to putting your ego on hold and concentrating on reaching your goal. Wooden says that having poise (being yourself and not doubting yourself), faith (conviction in your strategy) and the patience (giving your plan time to work) are helpful traits for success.
Wooden’s description of confidence (respect without fear and being prepared) may seem difficult to develop, but as an investor, it’s important to feel confident that you are making an educated investment. If you are a conservative investor, select options that meet your risk tolerance. Remember, however, the lower the risk, the lower the reward. Personally, I can accept moderate risk, but not crazy risk. My goal is to invest in quality dividend paying companies, watch my investments grow and manage risk by creating a balanced portfolio.