A Caddie’s Observations on Money Management

DHarrisonheadshotBy Diane Harrison

Golf is a game but also a mindset. As one of the harder sports to master, golf has long provided business partners, clients, and co-workers a valuable opportunity to observe behavior on the golf course that provides a strong indication of what makes up their peers’ mental fabric. There is a reason many business deals are made, and lost, on the golf course. Mastering the ability to handle oneself gracefully in golf is far more valuable than owning a low handicap. In fact, failing to behave appropriately is always carded as a loss.

JUDGMENT COUNTS

Judgment implies making decisions based on rational consideration. The hidden-in-plain-sight observer on the golf course is the caddie, who records, in real time, a golfer’s judgment. As a recreational caddie, I have spent several years carrying the bag for elite amateur golfers in tournaments as a way to learn how to play the game. I have learned not only much about shot selection, course management, and the short game, but more importantly, what makes for a successful sportsman regardless of the final outcome. Good money managers share several judgment qualities with these golfers. I offer the following as examples of success markers for investing as seen through the eyes of a caddie.

FOCUS—the vision to see what is important and forego distractions. Sometimes referred to as ‘in the zone,’ golfers who are focused can filter out other players and distractions to concentrate on their desired action. Money managers similarly apply this filtering discipline to financial markets in determining investment decisions.

SELF-RELIANCE—making something happen. People are inherently oriented either internally or externally. Externally oriented individuals primarily rely on outside cues and directives when deciding on a course of action. Internally-driven people tend to look inside for the signal to take a particular course of action. Golfers who enjoy consistent success are self-reliant, internally-driven, and believe in their own ability to choose the right action. Money managers who enjoy long-term success model this mentality as well.

DECISION-MAKING—do the right thing. While the end result might end up being right or wrong in a particular case, both successful golfers and money managers have strong decision-making skills. Passivity on the golf course or in the marketplace is never a desired mode of operation. Failing to make decisions and act upon them means that often, the only choice left is to be reactive.

CONTROL—discipline yourself before mistakes limit you. The ability to exercise self control and control over the environment to the best extent possible increases the chances for success. Everyone has seen examples of individuals who ‘lose their cool’ and suffer a mental meltdown. Once this happens, decision-making skills decline substantially. Golfers and money managers who exercise strong self-control have increased chances for making better decisions over the long run.

SELECTION—making choices that matter. In shot selection or asset selection, possessing the ability to evaluate and execute good choices is owned by successful golfers and money managers. The discipline requires prioritizing, discarding, and rating factors based on their singular and aggregate importance, and is a skill developed through experience.

ACCEPTING MISTAKES—cut your losses and move on. In golf, there is an adage that states “it’s not the shot you just made; it’s the one that follows it.” Likewise, in money management, recovering from a setback is often more impactful than the setback that occurred. Balancing the ability to handle errors while not being constrained by them in future decisions is a key strength of both successful golfers and money managers. Fear of failure does not play well in golf or investing.

ADAPTATION—change that which is holding you back. If it’s not working, then fix it. Stubbornness and hoping for a different outcome in the face of clear evidence that something isn’t working rarely appears in the arsenal of skills successful golfers and money managers emulate. The ability to adapt requires a measure of self-awareness and unbiased evaluation, and is a trait that serves successful individuals well in all walks of life.

GRIT—the ability to go the distance. Mental fortitude and stamina are prerequisites for golfers and money managers who perform at a high level over a long period of time. They involve the ability to shake off nerves, physical challenges, and external stressors to allow for optimal performance at a given time. Grit is a quality that golf lessons, or financial education, cannot teach. One is either born with the ability to tap into an internal reserve of power or not.

HUMILITY—others can offer learning opportunities. Being able to accept input from others is a critical skill in both golf and investing. Understanding that there are people in the world who are better than you are at your given vocation allows for real learning to take place. In golf, there is always someone who plays the game better and can teach you something about how to improve your game. In investing, time spent with a quality mentor is a valuable commodity in a money manager’s development.

PUSH TOWARDS SUCCESS—fight complacency and strive to be better. The best performers are always on a path to improvement. Never content to rest on their current achievements, they work at developing what makes them great and what needs to change to get to the next level. This is invariably true for the top performers in golf and money management. It’s an intangible quality that draws admirers and investors alike.

Diane Harrison is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 and specializing in a wide range of writing services within the alternative assets sector. She has over 20 years’ of expertise in hedge fund marketing, investor relations, sales collateral, and a variety of thought leadership deliverables. In 2015, Panegyric Marketing received AI’s awards for Best Financial Services Marketing & Communications Firm and Business Excellence in Strategy & Positioning Statements – USA as well as M&A’s Excellence in Financial Services Marketing – USA. The firm also won consecutive year awards in 2013-14 as IHFA’s Innovative Marketing Firm of the Year and AI’s Marketing Communications Firm of the Year- USA. A published author and speaker, Ms. Harrison’s work has appeared in many industry publications, both in print and on-line.

Contact: dharrison@panegyricmarketing.com or visit www.panegyricmarketing.com.

Be Sociable, Share!

Leave A Reply

← The STOCK Act Was Just For Show: Looking at the Inside of Insider Trading Banned in China: High Praise for a Statistics Textbook →