How CrossFit Offers a Perfect Analogy for our Investment Strategy

by Benjamin Beck, CFP® Benjamin Beck, CFP® | November 15, 2021

Say I’m stuck in a burning building and I’m on the top floor of a four-story building. I need help. Two strong, healthy individuals are available for the rescue, but I have to select one. 

Do I pick candidate number one, a marathon runner, who just ran 26.2 miles in two hours and change? A paragon of health, light, graceful, capable of effortlessly gliding up or down any number of stairs. Or do I pick the firefighter who is in halfway decent cardiovascular shape, probably couldn’t even complete a half marathon, but can haul heavy hoses and my 230 pounds down the requisite four flights? 

I want someone who can handle lifting and carrying me – a task that is undoubtedly going to call on monumental effort, if only for a short period of time. The choice is clear: I’m going with the firefighter.

After all, who’s to say that the marathon runner is more fit than the firefighter? We have thrown around the word “fitness” for a long period of time, but there really is no accurate or holistic definition for being fit.  About 20 years ago, CrossFit came along, upending the fitness world in so many ways, and in particular in how we defined the term “fitness.” The definition of CrossFit is “constantly varied functional movements performed at a high intensity.” In CrossFit, you measure your progress in terms of increased work capacity across modal domains by comparing yourself at one point in time versus a point in the past. The modal domains encompass different types of movements and skills to demonstrate coordination, power and speed.

CrossFit became an unstoppable phenomenon, its rise rivaling that of some of the fastest-growing franchises in the business world. Along with that success vociferous criticism from the rest of the fitness community claiming that CrossFit was not appropriate for many people. Many folks found it objectionable to recommend CrossFit to someone who is maybe 62 or 72 years old. What’s right for a healthy young person, they argued, is not right for someone who is further along in years, or in poor shape or suffering from other ailments. 

But CrossFit is defined as performing constantly varied functional movements. Simply stated, on a day-to-day basis, every time you work out you are doing different exercises. The key phrase here is functional movements. A squat is a functional movement: you’re sitting, your standing. A deadlift is a functional movement. You’re kneeling down appropriately and picking up something from the ground and standing up with high intensity. So, while my septuagenarian father may not be loading a whole bunch of weights on a bar, getting under it and trying to lift 400 pounds on his back, he does indeed still need to be able to perform that functional movement. It’s the same functional movement he needs to sit down in a chair and stand up from a chair. It’s the same functional movement he needs to kneel down and pick up a book off the floor and put it on the shelf. Everyday functional movements are something that every person should work on to the extent that they are capable of doing so, modified of course, to capacity.

Here’s where the details begin to really matter. The degree to which your intensity varies, meaning what needs to adjust from person to person, relies on many factors. Age is a big one. Another is the current state of your body, whether you're healthy or if you’ve been injured in the past. Let's say you have a really bad hip. You obviously want to adjust the intensity of that sitting and standing so that you don't further injure yourself. But to say that doing constantly varied functional movement is bad for some people does not make sense to me. And here is where I see a huge parallel with the way we invest at Beck Bode.

In the traditional investing world, we often hear terms like risk and volatility, and other metrics that people point to in order to somehow come to the conclusion that while a particular investment methodology may be appropriate for person A that same technique may not be appropriate for person B. I say, “traditional investing world,” because if you know anything about the way we invest at Beck Bode you’ll know that it defies many traditionally held norms. And this does not mean that we are any less careful or meticulous about our research. We just see the world differently. One of the ways we do that is that we do not believe for one second that something that is appropriate for me is not appropriate for you, regardless of how old you are or how much money you have.

The traditional advisor would say that stocks are appropriate for me, 41-year-old Ben, yet not appropriate for 76-year-old Bill, my father. At Beck Bode, we would vehemently disagree with that statement. “Not true!” you’d hear us cry. What is true is the degree to which we’d invest in stocks. Whereas the traditional advisor would have my dad liquidate the majority of his stock holdings and reinvest in bonds, or even move to cash, we would keep him in stocks. In other words, the intensity with which we invest would vary for the 76-year-old as compared to his 41-year-old son. In CrossFit when we talk about the intensity of the workout, we mean how much weight we're putting on the bar, how fast we're doing the workout, how many reps we’re getting in. In investing, the intensity of the investment refers to how much of our portfolio is dedicated to stocks. At Beck Bode, since we do not believe in owning anything but stocks, it means how much of our portfolio is allocated in the “growth strategy,” versus our “income growth strategy,” an allocation that is still 100% in stocks, but in stocks which are dividend paying and create a reliable income stream because those dividends are expected to grow based on our analysts’ information. 

Just because a person is 76 years old doesn’t mean they shouldn’t be exposed to stocks. The question is what kind of stocks they should be buying. In our income growth strategy, we buy into companies that forecast significant estimated dividend growth in the future. We sell when the dividends estimates fall. And we reinvest the proceeds in the very same way as we would reinvest the proceeds in our growth strategy.

Back to CrossFit, because that’s where we started this conversation. I simply do not agree that CrossFit hurts people. I would say that “constantly varied functional movement at an appropriate intensity” is absolutely appropriate for everybody. The financial industry says that stocks aren’t appropriate for everybody. We disagree. At Beck Bode, we believe that investing in stocks at the appropriate intensity is hugely, hugely beneficial for everybody. 

The fact of the matter is that your financial health is no different from your physical health. You want to develop and maintain stamina. How you do that is by working muscles incrementally, and keeping them all working, so that nothing atrophies. You don’t want to peak; you want to keep steady. The name of the game is to stay strong overall so that you don’t just have a solid start, but also a strong finish.

Ben Beck is Managing Partner & Chief Investment Officer at Beck Bode, a deliberately different wealth management firm with a unique view on investing, business and life.

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