US Amateur? Hardly
"You can learn from everyone. Many times you learn what not to do."
John Wooden, Basketball Coach, 10 time NCAA champion. –TWEET THAT!
Last month I was afforded the incredible opportunity to caddy at the U.S. Amateur golf tournament held at the Atlanta Athletic Club. I was assigned to carry the bag for a 17-year old rising senior in high school who hails from Raleigh, NC. Harrison Rhoades has already committed to attend Georgetown University in fall of 2015 and qualified for the world's most renowned amateur tournament.
Coach Wooden was correct. I "can learn from everyone," including a rising senior in high school. Harrison repeatedly reminded me of key investment principles while we were on the golf course;
- The Power of Experience
- Risk vs. Reward
- Controlling Emotions
The Power of Experience
The author Malcolm Gladwell has posited that it typically takes a minimum of 10,000 hours of practice to reach an expert mastery of one's craft. I am not sure how many hours Harrison has put in, but I can say with some certainty that if he hasn't already practiced 10,000 hours then he is not shy by much.
Observing him, as much mentally as physically, maneuver around the golf course for four days was both inspiring and confirming. Confirming? Yes. As I observed Harrison you could witness so clearly, to use a cliché, "that he had seen so many of these movies before." He had been in situations of hitting his tee ball off the fairway and figuring out how still to par a hole. He had hit approach shots before where he knew he had to remain below the hole to have a chance at par or birdie.
He hadn't just read about these situations.
He hadn't looked them up on the internet.
There wasn't "an app for that!" –Tweet That!
He has THOUSANDS of hours of experience that along with his knowledge of THE game and HIS game, have resulted in bona fide wisdom. Unfortunately, many of us confuse knowledge for wisdom and the ramifications can be very damaging in the investing world.
Warren and I have used our combined 60 years of experience to develop our Manager Selection process. Our experience along the way included "drives off the fairway" and "hitting our ball above the hole." There will be mistakes in the future, but our thousands of hours of experiential "practice" leads us to managers who have obtained wisdom and whom have earned admirable results for investors over 10 and 20-year rolling periods.
Risk vs. Reward
On day one of the tournament, we (yes, I've taken the liberty to say "we") were on the last hole. We came into that hole at even par for the day which we thought would be very competitive in the field of 312 golfers. The tee shot had gone left, but we had a somewhat clear 220 yard shot from the rough to the pin. We discussed what lay to the right of the green and Harrison calculated, in short order, the risk and decided to lay up and then wedge on to the green. We ended up with a bogey on that hole and finished one over for the day. He had taken a situation where he could have possibly made par but weighed that against perhaps having a double or triple bogey and made a great risk versus reward decision.
Our Marathon Roadmap process takes into account risk vs. reward on many levels just as Harrison made his calculation on that last hole of day one. As we discussed a month ago, it could involve checking your beneficiaries. It could involve Family Security Training and increasing the levels of your life or disability insurance. For some, it may be having us awaken you to the fact that you need to have a Social Security income strategy that we discuss in the Marathon Income Plan. For almost all we attempt to build investment strategies to achieve the income you will eventually need without taking on unnecessary risk.
Controlling Emotions
On the first hole of day one, Harrison hit a screaming drive. Unfortunately, it was screaming toward the wrong fairway. It was knocked down by some trees before it reached the wrong fairway. As we walked to his ball, he confided in me that he had never been so nervous in his life as at that moment on the tee box. I think I might have been as well if I were playing in the most prestigious amateur golf tournament in the world! He was still amazingly calm. He assessed the situation, took the proper action, and ended up taking a par on the hole. Later in the round, the exact opposite occurred. He had a great tee shot, wedged on to this particular hole to within 5 feet and made a birdie. His reaction? None. Identical to when he hit the ball almost onto the wrong fairway.
The markets giveth and taketh away. The best investors remain calm during both circumstances just as Harrison did. Unfortunately, for some investors the emotional toll that the 2008-2009 market downturn exacted on them has resulted in many having a very high cash position. Their emotions prevented them, to a large degree, from benefitting from the more than 200% rise we have had in the S&P 500 since March 9, 2009 (as of 9/1/14).
Be careful not to confuse information with knowledge or, worse yet, wisdom. Be diligent observing the risk you are taking. As someone famous once said, "it is rare you get hit by the train you see coming." (TWEET THAT!) Lastly, keep your emotions in check when it comes to your portfolio if you wish to achieve success investing.
As always, thank you for the introduction of your friends and family that so many of you have made. We are honored to serve you! As a service to our clients, we are happy to act as a sounding board for your friends and family. If any of them should need a second opinion on their financial situation, introduce them to www.striblingwhalen.com or call us at 678-989-0048.
Regards,
Warren D. Stribling, IV, CFP®
Principal
warren.stribling@striblingwhalen.com
Brian E. Whalen, CFP®, CIMA®
Principal
brian.whalen@striblingwhalen.com
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Brian Whalen and not necessarily those of Raymond James.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance.
Individual investor's results will vary. Past performance does not guarantee future results.
