• A commitment to a disciplined process is a major part of both golf and investing.
• Professional golfers focus on the process, not their emotions, to navigate the range of good and bad shots throughout a round.
• A disciplined investor should focus on the process, instead of daily market movements, as they move towards their financial goals.
“Competitive golf is played mainly on a five-and-a-half-inch course…the space between your ears.” –Bobby Jones
The weather is finally warming up here in the Northeast. That means golf season is right around the corner and I start reflecting on the parallels between two of my favorite passions: golf and investing. Golf is a sport that requires a demanding blend of physical ability and mental toughness. Many argue that the mental side of golf is harder to master than the physical side and it’s certainly one of the most demanding sports there is from above the neck. This post will highlight the importance of managing the mental aspects of both golf and investing – with the goal of helping you achieve your objectives on and off the course.
Managing your emotions: On the course
Have you ever watched professional golfer Jason Dufner on TV? If not, this video clip will help you understand why one commentator called him “one of the coolest dudes you’ve ever been around.” It’s not about the way he dresses. It’s about his even-keel emotional demeanor on the course. Whether he hits a great shot or a poor one, his expressions barely change, and that’s one reason why he’s so successful.
Pro golfers like Dufner get lost in “the process.” For any given shot, they gather as much information as they possibly can (distance, wind direction, carry distance, elevation, ideal landing spot etc.) go through their pre-shot routine and then execute the shot without hesitation. After the ball is in the air, nothing more can be done to change the outcome. Their emphasis on the process helps them manage each shot’s outcome – whether it’s positive or negative.
For the amateur golfer, individual outcomes play a far larger role than the process. One bad shot can lead to a multitude of poor decisions and self-defeating thoughts. Golfers will try just about anything to adjust their swing during the course of a round –desperately hoping to fix their flaws and avoid poor outcomes. Instead, amateur golfers should focus on the process, and not let each result dictate their future decision making. By focusing on what you can control, trusting your swing and managing your emotions – you will find that good shots outnumber the bad and emotions will play less of a role in your decision making. This is a simple, but not always easy, way to play better golf.
Managing your emotions: With your investments
As with golf strategies, investment strategies influence our emotional well-being. As we have talked about in the past, no matter how much information or data we have to support a decision, human emotion will cloud our decision making. If markets are up, investors tend to be more aggressive and confident. During a market correction, however, fear can push investors to be far more conservative and risk averse.
What gets lost amid the constant market changes is the process. Focusing on your investment process and financial plan, regardless of daily market volatility, will help you through any market climate. Maintaining a globally diversified portfolio that is aligned with your unique risk tolerance will keep you on the path toward your financial goals.
That being said, financial plans and portfolios need to be tweaked from time to time as life changes occur. But, emotion should not be guiding those investment changes. In both golf and investing, a disciplined process is far more advantageous than emotional decision-making and will keep you in the fairway and out of the rough.