Golf Scores
Golf is probably the only game with the lowest scores as winners. I remembered that Warren Buffett said something similar to this for investors. If every investor was given a punch card with a maximum of 20 punches, the investor would be very careful with each punch. Every time you invest in one stock, you loose one punch. If Buffett is correct, then investing is another game like playing golf.
In playing golf, there are three factors can have impacts on my scores. One is related to my internal skill level to play. Another is the physical environmental conditions of the golf course. The third one is my assessment of my skill level relative to the environmental conditions. Each one of these factors can have a dramatic impact to my final scores.
First factor is my internal skill level. This is related to my mental and physical strength to strike the golf ball to where I want it to land. It is related to how well I strike the ball accurately. This skill level can be improved by practice a lot on the driving range. If my maximum potential skill level is exhibited during my performance, I can play at par. But this is the maximum likelihood. The probability of reaching that level of performance may have a certain probability distribution.
The second factor is the golf course. The golf course conditions are more or less fixed. However, the landing position of my golf ball can have millions of possibilities. So the dynamic golf course conditions are not fixed at all. The golf course can exhibit millions of perspectives depending on where my golf ball is landed after each strike.
The third factor is my assessment of the golf course conditions looking from the point where my golf ball is landed or the starting point at the Tees. Since the staring Tees and the flag positions on the greens are changing every day, the Tees and flags themselves have many changes already. The landing positions of my golf ball in each game can be very different. Another factor is my selection of the golf club. I may use a wrong club for a strike even if the golf ball landing position is excellent.
Each of the above three factors are inherently dynamic. However, playing golf is also a self-correcting process. If my long clubs are not playing well, I need to play more long clubs in actual plays. If my putts are bad, I have to play more putts in order to putt the ball to the hole. So real golf game is actually a right process to improve my skills.
Investing is like playing golf. Each bad investment is like the missed strike in golf. The more misses we have, the worst investing results we get.
In playing golf, there are three factors can have impacts on my scores. One is related to my internal skill level to play. Another is the physical environmental conditions of the golf course. The third one is my assessment of my skill level relative to the environmental conditions. Each one of these factors can have a dramatic impact to my final scores.
First factor is my internal skill level. This is related to my mental and physical strength to strike the golf ball to where I want it to land. It is related to how well I strike the ball accurately. This skill level can be improved by practice a lot on the driving range. If my maximum potential skill level is exhibited during my performance, I can play at par. But this is the maximum likelihood. The probability of reaching that level of performance may have a certain probability distribution.
The second factor is the golf course. The golf course conditions are more or less fixed. However, the landing position of my golf ball can have millions of possibilities. So the dynamic golf course conditions are not fixed at all. The golf course can exhibit millions of perspectives depending on where my golf ball is landed after each strike.
The third factor is my assessment of the golf course conditions looking from the point where my golf ball is landed or the starting point at the Tees. Since the staring Tees and the flag positions on the greens are changing every day, the Tees and flags themselves have many changes already. The landing positions of my golf ball in each game can be very different. Another factor is my selection of the golf club. I may use a wrong club for a strike even if the golf ball landing position is excellent.
Each of the above three factors are inherently dynamic. However, playing golf is also a self-correcting process. If my long clubs are not playing well, I need to play more long clubs in actual plays. If my putts are bad, I have to play more putts in order to putt the ball to the hole. So real golf game is actually a right process to improve my skills.
Investing is like playing golf. Each bad investment is like the missed strike in golf. The more misses we have, the worst investing results we get.
posted by Unknown at 9:50 AM
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