I took most of this week off so that a friend of mine and I could go to the Masters golf tournament in August, GA. Our wives came along, though they stayed at our hotel location (in Savannah, GA) while we headed to yesterday’s final practice round and par-3 tournament. It occurred to me that there is quite a parallel between golf and performance measurement.

Statistics mean a great deal. For example, golfers count their strokes, and they’re used to determine how well one does against the course, as well as how one ranks against other players. This is how we measure the performance of the players.

There are essentially two benchmarks at work in golf: par (for each hole and for the course) and a peer group. While the former is a good judge relative to the course, it’s the latter that determines victory in a tournament (along with whether a golfer even “makes the cut,” and if he does, how much money he’s awarded). Investment managers are typically judged vis-a-vis at least one, if not multiple, benchmarks.

Golf, like investing, has risks, though they tend to be a bit more obvious (e.g., bunkers and water hazards).

Golf has rules … lots of rules. Performance measurement does, too, though they’re not nearly as refined or extensive. Many of these rules are not well understood and require interpretation, for both golf and performance measurement.

One of my favorite golf movies is The Legend of Bagger Vance. And one of the most memorable lines is spoken by Hardy Greaves, in explaining why golf is the greatest game there is: “It’s fun. It’s hard and you stand out there on that green, green grass, and it’s just you and the ball and there ain’t nobody to beat up on but yourself; just like Mister Newnan keeps hittin’ himself with the golf club every time he gets angry. He’s broken his toe three times on account of it. It’s the only game I know that you can call a penalty on yourself, if you’re honest, which most people are. There just ain’t no other game like it. .” [emphasis added]

We’re supposed to call penalties on ourselves, yes? That is, when we make a mistake, we are to determine the materiality of the error and what course of action to take. 

I think we can take pride in where we stand today, though we can look upon golf as a way to move forward; to develop our rules a bit more, and to be willing and comfortable at calling a penalty on ourselves.

p.s., to avoid any confusion, we won’t be at any more days of the tournament … we purchased tickets for yesterday’s event, but the cost for the remaining days is a bit beyond our budgets!