Know the Score: Monitoring Your Investment Game Plan

Heading into the final hole of the 1999 Open Championship, Jean Van de Velde held a seemingly insurmountable lead. All he had to do was score better than a triple-bogey seven and he would be the tournament champion.

Despite holding a three-stroke lead on the final hole, Van de Velde pulled out his driver. Fortunately, his tee shot ended on the 17th hole. That shot was fortunate because it went so far right that it carried the water bordering the 18th fairway.

Following the errant tee shot, Van de Velde could still play it safe and cruise to victory. However, Van de Velde chose the more aggressive strategy, attempting to reach the green with his second shot. After ricocheting off the grandstand and bouncing off a rock in the Barry Burn, the second shot settled in an area of deep rough.

Van de Velde’s challenges continued as his third shot landed in the water followed by his fifth shot finding the deep greenside bunker. When the ball finally found the hole on his seventh shot Van de Velde had lost his lead and ultimately lost the tournament in a playoff.

The decision to hit the driver on the final hole continues to be questioned after nearly twenty years. It’s unlikely for people to have questioned Van de Velde’s abilities, having birdied the 18th hole two out of the three previous rounds. Rather, people note the risk far outweighed the potential reward. The reward for being right was to win by 3-plus strokes while the risk of being wrong was obviously to not win at all.

Over the last 30 years, we have seen numerous examples of investors with seemingly large leads pull out their driver when all that is required to win is to keep the ball in the middle of the fairway. These investors typically have not paused to check their score and instead continue a strategy focused on building a lead. To ensure your investment strategy is designed for success, it is important to become familiar with these vital components of a sound investment game plan.

Know the Competition

Investing is a competition where your only opponent is your future self and the financial goals important to you. Unfortunately, there are no easily observable scoreboards along your course, so it can be difficult to check your score. Consequently, many investors mistakenly rely solely on market relative returns to determine if they are winning.

By partnering with Welch Hornsby, you have access to a team of committed financial experts who regularly monitor your investment game plan and provide you periodic updates with the current score. We help you set realistic benchmarks that align with your long-term investment goals so that you continue to keep your portfolio appropriately positioned towards the green.

Know the Bigger Picture

Your investment strategy is just one element of a larger, more comprehensive financial plan. This planning process clearly defines what victory means for you. It identifies the future financial goals that you are competing against and establishes a strategic spending, saving and investment game plan focused on maximizing the probability of success. Finally, it provides the necessary context to accurately check your current investment score, and, equally important, how much longer you have to compete.

Our team has the depth of experience necessary to develop a tailored financial plan that targets short-term goals while also considering the assets and resources that play into the bigger picture of financial success.

Know That Mistakes Happen

When you make an investment decision, it is wise to realize that many things are beyond your control. Mistakes will invariably happen, but fortunately, time generally heals most wounds. Running out of time is often the costliest mistake. Van de Velde’s biggest error was making a mistake on the final hole, turning a seemingly insurmountable lead into a permanent loss because he ran out of time.

At Welch Hornsby, we prepare our clients to navigate unpredictable markets and appropriately balance opportunity and risk by coaching them through both the short and long game.

If you are looking for a committed team to help you monitor your investments and keep your plan moving in the proverbial fairway of financial success, contact us today.

Written by James W. Underwood III, CFA – Chief Portfolio Strategist

The information and data contained herein has been obtained from sources believed to be reliable, but is in no way guaranteed by Welch Hornsby as to its accuracy. Opinions and projections are as of the date of their first inclusion herein and are subject to change without notice to the reader. As with any analysis of economic and market data, it is important to remember that past performance is no guarantee of future results.