Damage Control

by | Jul 2, 2018 | Asset Management

I had a conversation recently with a good friend of mine while playing golf.  He explained to me that during his rounds of golf he’s pretty good for most of it. Usually making par or bogey on 14-16 holes. The problem is there always seems to be 2-4 “blowup holes” where he scores double bogey, triple bogey or worse. These “blowup holes” can ruin an otherwise solid round of golf.

I said to him “damage control man, damage control”.

High level golfers have the ability to miss small and recover from their mistakes quickly. “Scrambling Percent is a statistic that shows a players ability to make par (or better) even if a Green in Regulation (GIR) is missed” – (Golf Stat Lab) Meaning it measures who consistently makes a good score on the hole even when they hit a bad shot. Most of the top players on the PGA Tour are high up on the list of Scrambling. Jason Day, Henrik Stenson, Rickie Fowler, Dustin Johnson, Rory Mcilroy, Brooks Koepka and Justin Rose are all in the Top 20.

This concept of damage control is applicable everywhere in life, especially investing.

Michael Batnick of Ritholtz Wealth Management recently published a book detailing mistakes that famous investors made.

“If there is one takeaway, it’s that investing is extremely difficult. You will make mistakes. You will repeat them. You will discover new ones. And just when you think you’ve got it all figured out, the market will humble you once more. It is imperative that you take this in stride, that you don’t let these molehills turn into mountains.” – Big Mistakes

Shane Parrish over at Farnam Street says “avoiding stupidity is easier than seeking brilliance”.

And finally Morgan Housel wrote recently “Avoid disaster, be patient, and you don’t need many smart decisions to do well over time.”

Investing, like golf, is more about doing all you can not to lose. It takes mental focus, skill and a great deal of willpower to avoid the “blowup holes”. But if you can simply limit the damage in whatever it is you’re doing, you’ll be well ahead of the rest.