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Contested in February, The Daytona 500, also known as “The Great American Race,” is regarded as the most important and prestigious race on the NASCAR circuit. And obviously, the big question every NASCAR fan alive is asking is “Who will win the race?”

The most logical answer is the driver who drives in the straightest line. Everyone knows that the shortest distance between two points is a straight line. In investing, a straight line is everything working out exactly as you expected, and you know that doesn’t happen too often.

When you’re driving your car from “point A” to “point B,” the shortest distance is a straight line. Yet, no one drives in a straight line even if your destination is a straight line from “point A” to “point B.” Have you ever driven on the highway and not zig-zagged? You zig left to the passing lane to pass another car. Once the pass is made you zag back right into your original lane. In essence, you zig-zag in an effort to go straight.

This is what I do in investing. The best investors make as few changes (or zig-zags) as possible and move in a straighter line than the average investor. The investor who is always trading back and forth for short-term gains generally loses because they’re constantly swerving all over the road and are lucky if they don’t lose control and run into a telephone pole.

Traveling a Straight Line

Let’s consider a professional race car driver to further illustrate this principle. Think for a moment what legendary driver Jeff Gordon is doing to win a race. His car isn’t any more superior than the rest. If you asked Jeff Gordon what it takes to win a 500-mile race he’ll probably tell you that he drives a straighter line over the course of the race than his competition.

Gordon has a game plan for every race, and adapts it to the particular track layout and weather conditions. He reviews his game plan hundreds of times before the green flag is waved to start the race. He knows precisely where his groove is and what line of attack will result in the fewest miles traveled over the distance of the race. When all is said and done, he travels in as straight a line as possible.

He also knows that the probability of executing his plan without any issues or challenges is theoretically low. At some point in the race the yellow flag will come out because someone has wrecked, spun out or is impeding the race. Something will happen to change his plan and require him to make a detour. But in spite of detour, he’ll go right back to his plan the moment the issue has been resolved.

Success in investing is like winning a NASCAR race. The fewer moves or zig-zags you make in your investing, the greater success you’ll realize.

But first you must begin with a game plan. You’ve got to know what you’ll do when things go “green” and also when things go “yellow.” You must know the track conditions and weather conditions to determine the most advantageous time to invest, and the straightest line to race.

Staying on Course

Investing will naturally bring detours, wrecks and spin-outs, but that’s life in the fast lane on Wall Street. Investment success comes from getting back to your plan as quickly as possible to steer your investment dollars on a straight-line course. But if you don’t have a sound investment plan, it will become impossible to get back on track because, frankly, you’ll have no track.

When I think back to the days before I learned Point and Figure charting (a very successful and vital planning tool I share with my clients), my investing was like being in a bumper car at an amusement park, wandering aimlessly and blindly smashing into the other bumper cars. I didn’t have a plan. But thanks to this well-weathered charting method, I’m now able to develop sound planning that greatly assists in investing success.

Are you investing as if you are driving a bumper car? It’s time to consider a plan for your investment dollars that will stop the bumping and steer you to the professional ranks of the Daytona 500.

MANA welcomes your comments on this article. Write to us at [email protected].