By Michal Emory on April 11, 2017
I love golf. That is why I love the beginning of spring because it means I can dust off my clubs and finally get back out on the course. There are so many intricacies to the game of golf that you can never really feel like you have mastered it. There is always something new to learn and something to improve on. Your swing can feel great one day and the next it can feel like you have never swung a golf club in your life. Golf is as much, if not more, a mental game as it is a physical game. It is, also, a PhD level course in taking smart risks and minimizing risks.
In golf parlance, par is the goal score, and birdie is the ideal score. Par means that it took you the planned amount of strokes to get the ball into the hole. Birdie means that it took you one less stroke to get the ball into the hole. Conversely, double bogey means that it took you two more strokes than it should have to get the ball into the hole. Therefore, if it should have taken you four strokes, a double bogey means it took you six strokes to get the ball into the hole. Double bogeys can kill your round of golf (and your confidence) very quickly. Personally, I have found there are two main causes for my double bogeys on the golf course: One, loss of focus; Two, not taking smart risks or minimizing risks.
In investing, the same two things can hurt your investment portfolio. At times, individuals can lose focus on what their objectives are, as well as the best way to reach those objectives. They may be investing to reach retirement or for life in retirement but make decisions based on the next week. Or maybe the talking heads on television are extremely optimistic or pessimistic and they make large changes to their portfolio because of what they hear. At other times, individuals will have only stocks with high volatility or be over concentrated in one area of the stock market. They end up with a portfolio that is much riskier than they intended or can handle.
We do this by constantly focusing on the amount of risk that we are taking and if those risks align with your objectives. We have daily, internal discussions on matters such as asset allocation, security selection, and time horizons. We want to focus on taking smart risks when and where it makes sense and being more conservative when it does not. We believe that by working to take “double bogey” out of play with your portfolio, you will have smoother returns and a better chance at reaching your objectives. Just as no one can dictate the conditions of the golf course on any given day, no one can dictate the conditions of the market. What we can control is our focus on our plan and what small adaptations we make as conditions change.
At The Trust Company, we are privileged to partner with you to help your financial goals become a reality. This is an honor we take very seriously. We take pride in offering a team that is able to help you build a comprehensive financial plan.