Mental training in competitive games

One friend of mine completed a recent triathlon, also called ironman, race. The race includes a 2.4-mile ocean swim, followed by a 112-mile bike race, and then a full 26.2-mile marathon, all back-to-back in the same day. Many athletes sacrifice a lot of family time to train year long so that they can keep fit. However, complete rate in triathlon is about 50% in that race. This number is certainly not a representative number. Most participants just want to complete. So this is a highly competitive game, in a sense that the enemy is the athlete himself. Success secretes specific to this game are effective training and time management. But there are some others we can learn, like how athletes train their minds in this tough games.

So there is great correlation in ironman race and investing, in which investors are not facing physical challenges but mentally brutalities. Thus mental training is equally important to physical training. Many training books ignore this aspect but stress techniques. It is analogous to skilled investors with a weak mind. Never make it. So I am curious how athletes train their minds.

Here is key points in a book by Don Fink, Be IronFit, on mental training. These points are easy to understand and self-descriptive.

• Mental training is about control negative thoughts, self-doubts and fears. It is not so important what happens to you but what is truly important is how to deal with it.
• The key is keep optimistic
• One of the two basic fears is embarrassment. We fear embarrassed when we fail so we don't act. To curb this fear, think like this, respect it instead of fear it. Trust your plan and training. 
• Lower your target. Make inchstone instead of milestone at difficult times.
• Be positive. You can do it. Every day is one of the two days: good day and great day.
• Family support is important. Ask for support and understanding.
• Find mentors instead of "go it alone". Not only one mentor but many on different aspects: career, family, techniques, etc
• When come to dealing with setback, don't focus on where you wanted to be, but focus on where you are. 
• Understand that ultimate secretes of athletics and life are persistence, desire, and strength of will.

These rules can be applied to everything in life as well.

Shareholder activism vs. Insiders

Last week, Yahoo CEO Scott Thompson's inaccurate academic credential triggered a hedge fund shareholder activist to ouster the troubled CEO. Activist hedge fund manager Daniel Loeb demanded that the board fire Thompson by noon EDT Monday or face possible legal action. Even though it is assumed the board won't lose Thompson at this sensitive timing when several deal talks are ongoing, the timing the activist picked is very suspicious. When the story broke, Yahoo is negotiating with Alibaba to sell its stakes back to Alibaba. Yahoo is also assume under talks with Microsoft, Alibaba, and others to sell itself. Loeb's motivation is get a few board seats, including himself, so that the hedge fund can affect these deals. The 6% Loeb controls may not aligned with the other 94% shareholders.

Stories like this doesn't always win other shareholders' support.But there are cases such shareholder activists win popularity. For example, Citi bank cleverly scheduled their meetings away from the clamouring mobs of Wall Street to Dallas and declined to provide a webcast. But its efforts could not muffle the bang made by a non-binding shareholder vote against a ludicrous compensation scheme for Vikram Pandit, its chief executive. In addition to Citi, according to The Economist, there are many more of these dramas to come in the months ahead. UBS, a perennially underperforming Swiss bank, was expected to face shareholder anger over pay at its annual meeting on May 3rd. Capital One will have its annual meeting on May 8th, and a “no” vote is recommended by Glass Lewis, an adviser to institutional investors.

In both cases, majority investors would stand in-between the activists and the company insiders. Besides hitting headlines, investors would need to decide if they want to be involved in these companies and proxy fights. In some extreme cases, investors should not be investing in these companies at all in the very beginning.

It was reported on WSJ that an investor put $190K into a "value" stock called Cadus Corp, it is still a listed company. Cadus, with a market value of only $19 million, has no employees, no operations, and just $100,000 in annual revenue from biotechnology discoveries that it sold a decade ago. Yet the company is sitting on $24 million in cash, plus more than $28 million in tax benefits that could be used to shelter future earnings. The reason Cadus attracts investors might also because of shareholder activist Carl Icahn. Investors would hope Icahn would unlock deposit cash to have higher return. But Icahn didn't think there was such an opportunity. The proxy fight went to nowhere.

It is somewhat ridiculous to invest a company without a market just because of someone sits on its board. This is certainly an extreme case. But such examples may happen again on some of us.