After several hours watching the world’s best golfers at the Kiawah Island Ocean Course here in South Carolina, it again hit home how difficult it is to deliver consistent, top-level performance. The professional golf scene this week at Kiawah is akin to investors selecting a portfolio of quality stocks that will deliver solid financial performance in the long run. Sponsor advertising from corporate consulting firms, investment banks, and even luxury watchmakers, messages this theme to golf fans. When VJ Singh, one of the leaders during the week, worked at the driving range, he used a shaft embedded in the ground to the side of his body. The purpose of this tool is to check the plane of his swing and eliminate variation. Use of such a tool is an attempt to develop swing consistency and rhythm. Kiawah Island and the links-style Ocean Course is known for extreme weather conditions coming off the Atlantic. Similarly, the equity markets are riddled with extreme conditions. Investors should also use such tools to develop consistency in basic skills to master the science of stock selection. Using a well-defined structure for the portfolio, combined with a consistent process for selection and for both buying and selling decisions (not to mention the timing,) will better position investors to minimize the variations that can lead to poor performance.
The weather on Friday, which included howling winds, led to poor scores overall, but four players excelled and delivered under par numbers. A few select investors have continued to deliver solid performance this year, even as the howling winds of the European debt contagion have swept over global equity markets (including the Pawleys Dividend Portfolio and the Pawleys Growth Portfolio, see the Q2 update for specifics). Stay tuned for more tips and learn how to master the basics (the “science”) and eventually, with experience, hone your ability to use “art” to supercharge your results. Golfers refer to this as “feel” or “touch” and it is what helps these professionals stay at the top of the leaderboard. Enjoy the PGA 2012 Championship tournament and the hunt for the Wanamaker trophy! The golfers all have diverse styles that they each own. You can use a putter, a driver or a seven iron off the fringe of the green, and each can be used with success. Think about how the tournament environment can help you hone your strategy and processes in managing your stock portfolio. Stay tuned for more as I share the specifics of equity portfolio construction…and be sure to watch for the alligators snatching the ground television microphones off the tee boxes!
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