What Can Golf Teach Us About Investing

People who love golf will tell you they love the challenge, outdoors, and relaxed pace golf offers. While golf and investing might seem like totally disparate activities, they share many similarities. If you can improve at one, you can likely improve at the other.

Consider these similarities: 

1. It takes time to become skilled. Becoming a good golfer requires a lot of effort and time. So does becoming a skilled investor.
2. Both require expert instruction to reach your potential. Even the best golfers have a coach. You might not hire expert instruction directly for your investments, but you can purchase books and other sources of information.
3. It’s easy to get into trouble quickly. One golf shot into the water or out of bounds can be disastrous. One poor investment might not destroy your portfolio, but it can come close if you don’t handle the mistake quickly and adequately.
4. To be successful, it’s essential to control your thoughts. This doesn’t mean you shouldn’t be thoughtful and intelligent. It means that emotions can force you to make poor decisions. Nearly all investors have made at least one terrible financial decision due to emotion.
5. Be patient. Hurried decisions are often poor decisions. Take the necessary time to make a good decision. Rushing a golf shot rarely turns out well. Jumping to conclusions about an investment leads to similar results.
6. Sophisticated tools are not the answer. Golf technology improves by leaps and bounds every year. Courses that held professional tournaments in the past are frequently too short to accommodate the better clubs and balls. However, the average player doesn’t improve his score with this advanced technology. 

• Investing theories, tools, and software become more sophisticated each year, too. These tools have never been shown to improve the results of the average investor. 

7. Short-term results are not an indicator of long-term results. One great shot doesn’t mean you’re suddenly a great golfer. One horrible game doesn’t suddenly mean that you’re a horrible golfer. 

• Just because a stock has gone up 10-fold in the last several years doesn’t mean it can’t go even higher! 

8. It’s all about risk management. The best golfers are great at hitting the ball, staying calm, and managing risk on the course. It’s not always easy to decide whether to lay up or go for the flag. Risk is a significant part of investing, too.
9. Casual advice is frequently lousy advice. Every golfer has had a friend, stranger, or playing companion advice on his swing. Casual investing advice is about as helpful. If you’re going to take advice, be sure to take it from a real expert!
10. Know where you want to go. How will you get to a good place if you don’t know where you’re going? Each shot on the golf course requires a target. This target is chosen based on the obstacles and the hole’s location. Your investing must have a target as well. What are your investing goals?

Golf and investing might not seem to have a lot in common, but they share many similarities. The same ideas that allow a golfer to become great will allow an investor to do the same. Planning, patience, and expert instruction are great ways to improve your success odds.