On Tuesday night I dusted off the clubs and hit the golf course for the first time this year with a few ladies at an Iron Lady golf clinic event – we’re sprucing up our skills and think that this year is going to be “our year” … thing is, I say that every year, and I continue to be rather terrible. At least I’m consistent.
The pro we were working with said that there were 4 common mistakes that most golfers make – here they are alongside 3 common investment pitfalls:
1. Twisting too far
The more you twist in your back swing, the more likely you are to miss. To gain distance you need to find the perfect posture that allows you to perform a fluid motion to ensure solid contact with the ball with proper posture, balance and grace.
Speaking of balance, Not Rebalancing is our first common investment pitfall. Once you have set your asset mix and built a diversified portfolio, it’s important to maintain a good mix over time. Market movements can often cause your allocation to drift from the weightings that were initially set in your portfolio – leading to a very different allocation (and investment experience) than you had originally intended.
2. Avoiding the vital swing rules – GRIP, CLUBFACE, POSTURE.
Your grip is the foundation to a great swing. Ensure that your grip is smooth but solid (not so tight that you crush the hypothetical birdy). Your clubface needs to be open and positioned towards where you want to go (so obvious but commonly overlooked). Your posture (or stance) needs to be solid & athletic – not too curved, nor too straight.
Another obvious but key investment pitfall is Buying High & Selling Low. Sure, it sounds easy enough — to generate gains, all you need to do is buy low and sell high. In practice, however, it’s actually a very difficult task. The key to avoiding this pitfall is to refrain from trying to time the market – time in the market pays off when you stick to your long-term plan.
3. Lack of acceleration (aka follow-through)
Many amateurs like myself make the mistake of decelerating through the swing and trying to scoop the ball, causing the ball to land short of the target. Instead focus on accelerating through and under the ball - in fact, the key for gaining distance when swinging is the finish, not the backswing.
A lack of diversification is Pitfall #3 - history has shown that different asset classes, industry sectors and geographic regions generally do not move in sync with one another. Since no one can predict exactly when one type of investment will outperform the others, the most effective approach is to hold a diversified mix of investments. Diversification helps to reduce risk and smooth out returns as lower returns in one asset class or market are often offset by gains in another.
4. Drive for show, put for dough
Spend just as much time (or more) on your short game as generally sucking in this area can add to your score quicker than you would expect. Another common mistake regarding the short-game swing is the use of our legs/hips – this swing should be dominated only by the motion of the upper body.
Enjoy the weekend and Happy Mother’s Day to all of the special Moms out there.