For better and too many times worse, there’s an inexorable link between the worlds of golf and finance. Yes, it’s certainly at the institutional level; we’re all quite aware of financial-services companies during golf telecasts. But it’s far more interesting to realize that market cycles can parallel your swing and even your strategy on the course.
Consider the respective pursuits of lowering your handicap and investing in the market. Both are largely individual activities prone to produce oscillations between euphoria and exasperation. Both encourage a lifelong honing of skills and knowledge with the promise that truth and perfection are unattainable. Both offer no guarantee that practical decisions will be rewarded, nor irrational decisions punished.
The power of the market, like the beauty of golf, is that it connects people from all walks of life, with all kinds of beliefs and strategies. There are the lucky players who can control their swing. They hit it straight, find it and hit it straight again. (Usually possess tidy short games, too.) To me, these are like Eugene Fama, Chicago-school efficient-market adherents. Maddeningly rational agents, they don’t believe in risk-adjusted returns. Their score changes one round to the next due only to random bounces and sheer luck. On the other side of the fairway—or perhaps the next fairway over—are those who play with spontaneity, verve and a bit of recklessness. They have all the shots, but rarely on the same day. I liken these folks to Richard Thaler–inspired behaviorists. Their decision-making highlights the irrationality of humans, the unpredictability of action and the naïveté of efficient markets. And clean scorecards.
Further out on the periphery are smaller, niche groups. There are the quants of golf, the smartest guys in the room, constantly talking about lie and shaft angles, spin rates and 12 other measurables that make your head hurt. Then come golf’s gold bugs, the people biding their time until all hell breaks loose and technology gets dialed back to their beloved hickory shafts and gutta balls. Finally, the fledgling crypto believers would have us all playing glow-in-the-dark golf in complete anonymity.
Where do I fit in? It’s become clear that I’m like an unregulated market: very much prone to wild fluctuations. Ultimately, my head and my heart reside with the behaviorists. You see, I don’t believe that a round of golf should be an exercise in risk aversion. I believe in trying new shots—often to my score’s detriment—and figuring things out as I go along. Nothing bores me more than pounding balls on the range, trying to groove my swing. In the parlance of markets, the driving range to me is like a lender of last resort, offering much-needed liquidity in the form of range balls only after some cataclysmic shock has affected my system. At times of such robust breakdown, the popular phrase “too big to fail” runs through my mind, though standing at 6’8″, I’m too big not to fail when it comes to consistently coordinating my mess of limbs and appendages into a smooth, repeatable swing.
The economic framework that truly captures the essence of my golf experience comes via a relatively obscure economist named Hyman Minsky. A 2008 New Yorker piece detailed Minsky’s five-stage model for financial crises. It speaks truth to my game like nothing else I’ve read:
1. Displacement: An event serving as a catalyst for optimism and investment. Most times, this is a simple swing-thought or alignment adjustment.
2. Boom: Whether coincidence or not, the swing-thought works and my contact is steady. Like Charlie Brown kicking a football, I always entertain the notion that this might be the secret.
3. Euphoria: I’m able to string together consistent swings. There are four or five rounds per year where I’m relatively confident the ball will do what I envision. It’s pure bliss.
4. Profit-taking: For Minsky, this is the point where the smart money gets out and cracks begin to emerge. For me, it’s where the dread creeps in when a round has gone too well for too long.
5. Panic: A shanked long iron. One too many open-faced wedges. Getting the clubface square at impact is an entirely foreign concept. The jig is up; the feels have vanished.
Phil Landes is better known as Big Randy from the No Laying Up collective. Despite his strong opinions, we’re told he’s a gentle giant.