(Re)Learning How to Fall

[An article from the December 2022 issue of our client newsletter, The Lantern]

Isn’t it amazing just how much kids can teach us? It’s hard to believe that once upon a time, we were all so ignorant and yet so wise. Little did we know of the world around us, but unaware, we knew so much. We knew how to learn. As children, we have to know how to learn, it’s integral to our survival. Sitting back and watching an infant in awe at the world around him is truly inspiring. Toddlers are willing to try and fail and try again, often without anyone around to encourage them. They are so thirsty for knowledge, even if it comes with a bump or a bruise at times. But any parent who knows a thing or two about child development understands how crucial this is to their child’s development. As a matter of fact, it’s possible this specific skill is one of the most critical any of us could develop, while also being one we almost all but forget - learning how to fall.

While my youngest son, James, has his mind set on keeping up with his big brother and sister, I once again have the privilege and joy of watching him learn how to walk. Now that I am a bit more seasoned as a father, I find myself far less excited by his first steps than I am by watching James teach himself how to fall. I know that sounds terrible, but bear with me. 

If you have ever watched kids on a playground, or if you have kids of your own, you know that they are naturally a bit more “elastic” let’s say, than we are as adults. They bounce. By the time your birthday cake sees 30 or so candles, you have to be careful just sneezing in fear of pulling a muscle in your neck; Meanwhile, kids can jump off the monkey bars, tumble, and pop right back up as if nothing happened. Then they go do it again. Yes, we know that kids are just more “durable”, a gift from nature allowing us all to make it through childhood more or less unscathed, but there is much more to it. In addition to being durable, kids learn how to fall. Generally, nobody teaches this. They learn this on their own, often with remarkable grace. 

I remember the first time my daughter, Emmie, fell hard while learning to stand and walk. I was a new dad, she was my precious little baby girl. Let’s just say I was in pieces, scared to death. While she certainly shed a few tears, I was amazed at how soon she forgot about it… or so I thought. But here’s the thing, she didn’t forget. It wasn’t but a few minutes later, she pulled herself back up, started gingerly wobbling then fell gently back onto her cushy, cute, little butt. No harm, no tears. It took one big “ouchy” for her to realize this is how it goes. From that point, she seemed to have realized, “Hmm, I guess this will be part of getting where I want to be, so I had better learn how to fall ‘the right way’, a way that limits the pain and damage.” And that is exactly what she did, that is exactly what my son Jack did, and now I watch with so much joy and excitement as James is doing the very same. 

So you may be thinking to yourself, “So what? Kids learn to fall, good for them.” Right? Sure, but I don’t remark on this casually as a doting father. As is so often the case, there is an amazing lesson we can all learn from our one-year-old selves. A lesson that most of us seem to forget somewhere along the way to adulthood - most of us need to (re)learn how to fall. 

Babies want to learn to walk. They realize it is needed to keep up. They also desire independence and the ability to get to wherever their curiosity takes them or to whatever curious thing they want to explore next (even if it is a cabinet with child locks, sorry kiddo). They want to walk so they can get where they want to be more efficiently and quicker than crawling. Sounds an awful lot like any investor. We seek financial independence. We invest a portion of our hard-earned dollars to get where we want to be more efficiently and quicker than by saving, alone. While two-legged mobility is a liberating superpower for a baby, financial security is a superpower for just about any person. 

There are many parallels that can be drawn between a baby’s journey toward ambulation and each of our journeys toward achieving financial freedom, but there is one major difference. The baby recognizes almost immediately how important it is to learn to fall as a part of the process. The baby quickly comes to understand that falling will happen, it is a certainty, but the severity and pain involved with the fall can be minimized if done properly. And as the baby matures into a toddler, taking more steps, faster steps, adding in a skip, a hop, or a jump, the child remembers how to fall. As more risks are taken, the falls may be harder and may result in more superficial scrapes and bruises, but that is a risk most kids accept as a part of the process. It’s the only way they will ever get to ride the scooter or bike or climb the tree, whatever the next objective may be. No matter the circumstances, the child never becomes rigid. They remain flexible. They do not land like a brick. They remain limber, flexible, and elastic. 

This is where we all have a lesson to re-learn. Once upon a time we all learned and remembered how falling was going to be part of the journey. It was the only way to get there, wherever “there” was. Then we forgot. As we reflect on the past year, and peer into what the year ahead may hold, so many are lamenting the state of investment markets. There is anger and unease. Blame is being cast left and right. While I could add fuel to that fire, and easily point out many guilty parties who’s decisions led us to where we are, I also recognize that no matter who did what, this is part of the journey. As a function of nature, it is nearly impossible to find an example of anything that does not require ebbs and flows, gives and takes. The important thing to focus on is how you can strategically minimize how much you give and maximize how much you can take. This is the difference between falling flat on your face or gently falling back onto your soft rear-end. Falling is a given, how you fall is not. 

Just as a forest fire clears the land, enriches the soil, and allows new budding trees to take root and bask in the warm, sweet glow of the sun’s light so, too, do bear markets clear the path for new market leadership and investment opportunities. While we may likely be witnessing a significant sea change that will define the characteristics of the investment regime in the years to come, the important thing to remember is that falling is part of walking. Opportunities will once again reveal themselves, but only if we get back up and continue putting one foot in front of the other. If we lay on the ground, crying and screaming, fighting the reality that falls are part of growth, we will never take that next step. Rather than convince ourselves that we are infallible or that markets only go up, we need to remember that falling is part of the journey. Falls should not be discouraging, they are necessary. The key is falling “the right way” whenever possible, just as we have in 2022.