The Ryder Cup was held this past weekend, a team golf tournament between the United States and Europe with a rich history. The tournament goes back nearly 100 years and is unique in that it takes what is predominantly an individual sport and turns it into a team event for one week, divided along continental and national lines.
The strategy is fascinating. Each team has a captain who decides which players will play in various 2-man team matches against their opponent, with the final day being head-to-head single matches. The home team has the added advantage of deciding how easy or hard the course will be set up. Every two years the tournament rotates between the U.S. and Europe, giving the home team the advantage.
The last 4 Ryder Cups have been dominated by the home team as they’ve each used deep insights and relied on heavy analytics to give their team the best chance at winning by setting up the golf course to favor their team. In each of these recent matches, the reliance on research, history, and analytics has paid off in blowout wins for the home team.
At this point you’re probably wondering if this is a golf article or an investing article!
There are a lot of parallels we can pull from Ryder Cup strategy to investing your money:
- Research and Analytics Matter: It’s possible in the future that the current era of Ryder Cup matches may be known as ‘The Analytics Era’ for how important they’ve become. Building an investment portfolio in an efficient way using thoughtful research and tested portfolio analytics is similarly important. A lot of thought needs to go into how a portfolio is constructed to help achieve your goals.
- Economic Cycles Matter: Similar to how the golf course setup by the home team greatly affects the outcome of the Ryder Cup, the economic setup for portfolio construction parallels importance. For example, the past 18 months have been marked by rising interest rates. How your wealth advisors positioned your fixed income duration during this time has greatly affected your experience in this asset class.
- Team Matters: The captain of each Ryder Cup is perhaps the most important decision-maker on the team. He gets to choose a handful of players who don’t automatically qualify and chooses who plays in which matches. Many times, winning or losing can be traced back to these decisions. It’s no different with your wealth management team. Having an experienced team, with good people who know how to navigate the investment landscape, and who will pick up the phone and explain your money to you, is key to the entire process.
Successful teams have similar qualities and proven processes. The Ryder Cup is perhaps the ultimate example of how leadership, decision-making, and the use of data can influence the outcome of an event.
Investing and money management are no different.