Physics Of Sailing


Physics Of Sailing

For those of you who have yet to venture sailing offshore with me, you may wonder what is my “thing” about lighthouses and sailboats? I grew up sailing in small boats on the Connecticut River and ventured forth on memorable family vacations aboard our Tartan 30 sloop. As a “recovering engineer,” I remain fascinated by the sea and still learn from my sailing adventures. The first thing I share with my novice crew is the way the sails try to tip (heel) the boat over and the keel tries to keep the vessel upright. As the breeze increases, the tipping results in wind spilling out of the sails. The further the boat tips, the more “righting moment” is applied by the keel. This righting diagram shows a sailboat viewed from behind.

Parallels To Investing

Here is where things get interesting. The sails are similar to the stocks that drive our portfolios over the long term; while the keel is akin to bonds that provide the stability for a smoother ride. They tend to counterbalance each other in a parallel fashion to the negative correlation between these two major asset classes in financial markets. It does not stop here. The tides move in cycles of 6 hours and 12 minutes - meaning that the currents in Fishers Island Sound are somewhat predictable in their direction and magnitude. Islands, reefs, wind, and waves complicate the picture with unpredictable (and unstable) back eddies that throw us off course. As companies generate sales revenue, only a portion of that income makes it all the way past expenses to the bottom line. This “net profit margin” is similar to how a sailboat can travel into the wind. This vector diagram shows a sailboat looking from above.

Embrace The Unexpected

One of the greatest lessons that can be taught out on the water is a respect for Mother Nature. An old saying goes that it is far easier to change the set of our sails than wait for the breeze to change direction. This principle can be applied to asset allocations as we make tactical adjustments with the expectation of reversion to the mean. The more difficult lesson comes when the wind dies completely and we are forced to simply “wait it out” until the new breeze fills in from the other direction. This is where we learn to be a strategic investor using our skills of patience and optimism. A lighthouse in the distance provides the beacon for our course. Enjoy the summer!




Location: JQR Capital

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