The Biggest Loser

I usually do not like reality television shows, but NBC’s “The Biggest Loser” is different. From the first episode, I was drawn in to the program that requires overweight contestants to challenge themselves before America to try to lose weight. Everyone wants to claim the $250,000 prize but it is clear that each one is on the program to reclaim his or her life. As I watched the finale last night, I knew that there were lessons for investors to learn from these “Biggest Losers”.

The first thing that is striking when the twenty participants show up is the moment they step on the scale. For some, it has been years since they actually knew their weight. This is not unlike many meetings that I conduct, when people, even those who have a lot of money, admit that they have no idea what they own inside their accounts. One woman with $1.5 million noted, “it’s almost like I am afraid to look because then I would have to be responsible for dealing with it.” It is clear that both in weight loss and investing, it is important to know where you stand.

After seeing the numbers, most of the Biggest Losers were shocked, but they were lucky enough to have one of two trainers assigned to them. The trainers are responsible for developing and implementing a diet and exercise program that would help each contestant reach a predetermined goal. Obviously not every person who is overweight has the luxury, but it’s TV! I love the idea of setting goals and creating a plan to reach them. Recently a woman said to me, “I am nearing 60 and all I want to do is make sure that when I stop working in few years, my money will provide me with $70,000 per year. I’m just not sure how to get there with my investment portfolio.” That is a specific goal, which is great and all I had to do as the “trainer” was to create the game plan.

The next steps include hard work and discipline. I wish it were easier, but it isn’t. Watching each participant struggle with the workouts and re-learn how to eat, I thought about how investors often have to endure pain (see 2000-2002 and more recently, the first quarter of this year!) and battle old demons. How often are there moments during a downturn when you want to act emotionally and simply sell? Like reaching for that bad food choice, it is hard not to succumb to emotions, but disciplined investors know that sticking to the plan is likely to get them closer to the goal.

Measuring performance is imperative to understanding how you are doing and knowing whether you need to make adjustments along the way. If you are trying to lose weight, you need to step on the scale and face the numbers (on the show, this occurred weekly and was the high point for the contestants and viewers.) If you are managing your portfolios or if you have hired someone to do it for you, you need to know your performance and compare it to the most relevant benchmark. Investors should do this at least quarterly.

Finally, I should note that just because you fall off track does not mean you can’t get back on and be successful. The winner of Biggest Loser was Ali, a 32-year old woman who was voted off the show after the third week, only to win a spot back on five weeks later. She went home, stuck to the plan, got back on the show and ultimately lost the highest percentage of weight of the twenty contestants. She reached her goal, won the $250,000 prize and now must maintain all of the amazing progress that she has made. I would tell Ali what I tell many of my clients: you have done all of the hard work, so now its time to not screw up! Stay on plan, be disciplined and stay in control. By doing so, the Biggest Loser can continue to be the biggest winner.