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The hole-in-ones of investing

  • 10Jul 15
  • Bev Hendry Co-Head of Americas at Aberdeen Asset Management

What does golf have to do with investing? In our view, a lot.

Today marks the second day of the Aberdeen Asset Management Scottish Open, an annual battle of the golf pros that we currently sponsor. Held in the Home of Golf, this European Tour spectacle is a cherished competition. We’ve been loyal supporters of Scottish golf for more than 15 years. 

Tournament aside, the sport also ties-up with something else we hold dear at Aberdeen. That is investing. There can be ways where winning on a golf course is much like succeeding in investing.

It takes years of practice just to master a golf swing, not including the additional hours it takes to learn how to play on various terrains with rough and hazards. These are obstacles that can get in the way of a player’s performance. These hazards would be equivalent to market events for an investor.

Because despite a golf player’s expertise, no matter how many professional trophies he or she may have won, it isn’t always a good day on the course. The ball can just as easily land in the bunker instead of on the green, where the player intended the ball to go. And no number of awards or amount of years spent practicing was able to prevent it from happening.

And no matter how well a golfer selected his club or how strong his swing was, it won’t be enough to make a good golfer great. (Or to help tell the difference between a good golfer and a great one.) For instance, someone who was not familiar with Tiger Woods’ name might assume he was a bad golfer if that person happened to watch Woods play on a day when his swings kept missing the hole and landing in the rough.

This is why in golf, it is about consistency. Tiger Woods has certainly had a number of his swings miss the hole and land in various hazards during his career. But that has hardly diminished his credibility as one of the world’s top golfers. That’s because he is a consistent performer, despite some bad days here and there.  

One good game – or bad one – barely tells the story of a golfer. The same way that one bad month in the markets or one bad year in performance can hardly tell the story of investing.

The markets are unpredictable, and a portfolio that provided substantial income one year may not continue to do so in the next. For this reason, both investors and asset managers, are on the same eternal quest as golfers for consistency.

Both investors and asset managers are on the same eternal quest as golfers for consistency.

Consistent investment performance is a much better tell of an investor’s or asset manager’s true ability. The real way to master investing, like golf, is through patience and time.

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