Meaningful Returns

I grew up near what is, in my opinion, THE golf mecca of the world: Pinehurst, NC. And I’m just now seriously getting into playing the game. So go figure.

There are many parallels between sports and investing, and golf is especially rich with them (see here, and here already). The latest I’ve discovered is this:

The object of the game of golf is to score well, by hitting the ball into eighteen different holes taking the fewest strokes possible (and to have fun along the way). But the novice or even average golfer does not often act as if that was the object of golf. If you observed the habits of these golfers (myself included), you might come up with a different object altogether–something like this: The object of the game of golf is to score well, by hitting the ball off the tee as far as you can. I say this, because if you go to a driving range, most average golfers are spending most of their time hitting driver, and rarely thinking about their putting or short game, despite that being the area most easily improved and the area that could provide the most benefit to the object of the game: to score well.

It is very much the same with investing. The object of investing is to make your wealth grow in order to fund specific goals you have in the long-term future. Yet, many people behave as if the object were something different entirely: The object of investing is to tell cooler stories than _________. Instead of focusing on things that are controllable and most likely to result in meeting the actual object of investing (things like not underperforming the market, cutting fees, being tax-sensitive), they concentrate on the proverbial driver of investing–trying to pick and choose the coolest stocks so that they can talk about their amazing gains at the next holiday party.

Never forget the object of the game. And get better at it by starting with the things most easily improved upon.