Rafael Nadal is arguably the best male tennis player ever. He’s the greatest of all time when playing on clay. He’s tied for the most Grand Slam titles. He’s won Olympic gold medals in singles and doubles.
The guy is amazing on the tennis court.
Turns out, Nadal is also remarkably insightful.
In 2019, Nadal was interviewed by 60 Minutes. I came across the interview recently and was struck by Nadal’s thoughtful responses. I wanted to share three important investing lessons he provided – even though Nadal didn’t intend them as such.
Lesson one: Emotions are critical to success.
The interviewer noted Nadal is unique in an interesting way. He has extraordinary control over his emotions. Nadal was asked how many tennis rackets he had busted in anger during his career, a common way for tennis players to release frustration on the court.
Nadal’s response: “Zero.” He has never broken a racket. Not once. The interviewer asked why.
“For me,” he answered, “breaking a racket means I’m not in control of my emotions.”
Investing is filled with I-wish-I-would-have’s and I-can’t-believe-I-did-that’s. There are highs and there are lows. The best investors aren’t the smartest. The best investors are the ones who are able to keep their composure while everyone else is losing theirs.
Lesson two: We all dwell on losses, to a fault.
The interviewer noted Nadal had basked in glorious victories and suffered heartbreaking defeats. He asked Nadal what was more intense, the joy of winning or the pain of losing.
Nadal took in the question. He looked up, searching his memory for those moments. He weighed his feelings and pondered for several seconds more. Nadal finally shook his head in indecision, shrugged his shoulders, and sighed. “Depends on the moment.” Nadal paused for one last reflection, struggling to confidently answer the question. Finally, he looked up at the interview and said, “I think over my career that I have been happier with my victories than I have been upset with my defeats.” He paused again, “I think.”
This is coming from, again, arguably the world’s greatest male tennis player of all time, who has done far more winning than losing. And even he can’t decide if his wins overshadow his losses.
That same phenomenon is why investors remember so vividly when their accounts fall in value. Losses induce tremendous doses of pain. That pain often eclipses the joy experienced from seeing an account increase in value. But while losses tend to grab our focus, they shouldn’t. They are inevitable from time to time in the game of investing.
Lesson three: Money is important, but it’s not worth sacrificing the things you love to get more of it.
The interviewer asked if Nadal had ever considered moving his business, Rafa Nadal Academy, a proving ground for up-and-coming tennis players.
The academy is located on the island where Nadal grew up, off the coast of Spain. It’s not a major metropolis and travel to the island takes a bit of coordination.
Nadal didn’t miss a beat with his answer. “Honestly not,” he said, shaking his head. “A lot of people [would] because of taxes,” he explained. “I have all of the people that I love here. And I [could make] much more money if I moved to another place. But moving to another place if I am not happy could be very, very expensive.”
No amount of money is worth being miserable.
Sometimes the best tradeoffs leave money on the table.