Tennis Lesson #1
Tennis is a game of errors. The main goal of tennis is to make fewer errors than your opponent. Today, we will discuss the use of spin when serving to get the ball in play more consistently while making it more difficult for your opponents to return the ball.
You create spin when you come across the ball with your racquet upon impact. You snap your wrist from left to right as you impact the ball at the top of the toss for a right-handed player. The spin causes the ball to curve from right to left because the counter-clockwise spin creates higher air pressure on the ball's right side. The rotation also adds greater control, so it is easier to get the ball in play.
An Example of using a Spin serve
Hit a spin serve to the right (your right, his left) of your opponent, and the ball should bounce into his body, making it challenging to hit either a backhand or a forehand. The ball may also bounce unpredictably, causing difficulty with your opponent's timing. Then you can use a strategy to keep your opponent guessing what shot you will employ next. You could try to wrong-foot him and vary your spins.
Investing Lesson
The analogy to investing is this: your opponent is the entire market and all its participants' intelligence. When putting your money to work, make sure you have enough on the ball to get a rally going and a strategy to keep the ball in play no matter what your opponents throw at you. Make sure you have a tested system to employ once the game begins.
Game Strategy
Imagine your playing doubles and winning every point easily. (The market for your stocks has been going up and has not presented you much difficulty). Suddenly, the market's balls come at you with such speed pace that you can't even touch the ball (bear market). You have no defense against this onslaught and realize you had to defend against the markets' new aggressiveness.
Suppose that you had put in place a strategy to employ in case the market pulled off its bear market tactics. Let's say you had prepared in advance to return that hard-hitting ball by knowing where to stand, anticipating those tough (bear market) shots, and throwing up lobs deep to the baseline. You and your partner might stay in the game long enough to regain the momentum and regain the lead.
When the market is heated, everyone is making money. However, That is not how the story ends. The story ends when the tennis facility catches fire, and everyone is running for the exits. Fortunately, you had also placed your bets on the firemen! They are getting paid overtime and hazardous duty pay. Construct your portfolio to have some investments that will do well when the house burns down.
Getting back to the tennis analogy, you have to have a plan for both offense and defense. You have to have both in place at all times because no one can predict what will happen tomorrow, next month, or next year. Drop shots, lobs, and spin serves can be your best allies. With investing, make sure you own some of the firemen!