In today’s Money Morning…here’s US$30 million to wear a polo shirt and a hat with our name on it…like golf, investing can turn an amateur into a pro, if even just for a fleeting moment…and more…
We’re avid golf fans. We like to watch it. We like to play it. We like to go to it — much to our wife’s confusion. She doesn’t get it. She thinks it’s boring.
We can see where she’s coming from…sort of.
To a non-player it does come across as incredibly boring. However it can be incredibly rewarding, even for the amateur player. Or incredibly frustrating. You can go through highs and lows all in the space of one round.
It’s exactly like the swings and roundabouts that investors go through on a daily basis trying to build their wealth.
Now, we watch a lot of golf. And the funny thing is, there’s a lot of similarity between what we think is the hardest game in the world…and golf.
Big money for those who are good enough
We’ve gone a little golf mad this week because today, this morning, is the opening round of the US Masters.
The Masters is one of golf’s ‘majors’. That means it’s one of the biggest, and most lucrative tournaments on the PGA Tour — golf’s premier competition. And when we say lucrative, we mean it.
This year the winner will get a cool US$1.8 million. Even second place reaches seven figures with US$1.08 million.
Even 50th place will still take home US$25,200. But ideally you want to be in the top 23. Everything above that will walk home with a six-figure payday. All up, the total prize pool is US$10 million. That’s why it’s one of the ‘majors’.
These professionals play like superhumans. They hit it so cleanly. Make shots that seem impossible look easy. They walk around with their sponsor-laden attire, names like Nike, Under Armour, KPMG, NetJets, RBS, HSBC and Investec.
Actually, that’s one of the more interesting parts of the game; the number of financial institutions that sponsor golf.
Take for instance one of golf’s greats, Phil Mickleson. Mickleson is to golf what George Soros or Warren Buffett are to investing.
At 46, Mickleson’s been around a while. But he’s still going strong, currently tied for fourth at The Masters (he’s won it three times before, we might add).
Mickelson’s personal sponsors include Callaway (golf), Rolex (watches), Amgen/Pfizer (biotech), Exxon Mobil (oil), Barclay’s (banking) and KPMG (tax and advisory).
That’s quite an incredible mix when you think about it. And according to Forbes, those sponsors kick in around US$30 million to Mickleson’s bank account each year. But it’s his hat deal with KPMG that’s been going now for eight years and is symbolic of Mickleson on a golf course.
Big money from those like KPMG flow to golf because they know there’s money to make in and around this sport.
The money that goes into professional golf is astronomical. But it’s a limited number of those at the top that get access to it.
While there are plenty of golfers out there, don’t think it’s an easy game to master. Golf is hard. Similarly, investing and making money is hard (unless you’re Phil Mickleson). But with the right mindset you can be a pro at both, if only for a brief moment.
850 times harder than the biggest game in the US
Around 60 million people worldwide play golf. Only 125 get a ‘tour card’ each year. This allows them to play in any PGA Tour tournament.
That means just 0.0002% of golfers will make it to the big time. As a point of comparison, in the US just over 1 million kids play American Football in High School each year. Around 30,000 of them go on to play in College. And just 1,696 will play in the NFL as professionals.
Even still, 0.17% of high school kids will turn pro in the NFL. That roughly makes it 850 times harder to make it as a professional golfer than an American Football player.
That’s why, as a player of golf, you love to play and you hate to play all at once. It’s an incredibly hard game to play, and even harder to master.
And we must say it’s an incredible parallel to the investing world.
Investing your money is an incredibly hard game to play. It’s even harder to master. And most people simply won’t ever get near the level of a professional investor.
But like golf, everyone is able to play the game. That’s what makes investing so much fun. You don’t have to be a pro to pick up the ‘sticks’ and have a go yourself. And the good news is, also like golf, every now and then you’ll do it as good as the pros — sometimes better. And that makes it all worthwhile.
For a brief moment we were number six in the world
Take for instance Jordan Spieth’s 15th hole this morning. Spieth is currently the 6th best golf player in the world.
It was a Par 5. That means the hole is deemed hard enough that it takes 5 shots to sink the ball in the cup. Any shots under 5 and you win a stroke. Any shots over five and you lose a stroke.
Spieth took nine shots to sink the ball. That means four over par. For a professional golfer that’s horrible. But golf can be so hard that even the pros completely stuff if it up from time to time.
We must admit watching Spieth fall apart was a little fun. It made him human. It showed that even the pros don’t get it right 100% of the time. It made us realise even we could have probably made it in nine. For a moment, a brief moment, we were as good as the 6th best golfer in the world.
And that was all that was needed to inspire us to play on. This weekend we’ll pick up our sticks and go around 18 holes. As we do, we’ll have the knowledge that just once during the round we might be as good as the pros.
That’s the mentality average investors need to take to the investment game.
The truth is most of the time you simply won’t be able to invest as well as professionals. Without the time, resources, knowledge and practice, it’s simply not possible.
But that doesn’t mean you can’t occasionally be as good as the pros. With the basic tools, a bit of knowledge, the right advice and guidance, you can hit big winners like the Soros or Buffetts of the world.
If you hit just one or two of those big winners, then it will all be worth it. And you’ll play the game again, knowing that you only need to be as good as the pros once or twice to take your game to a whole new level.