With stock markets and foreign investment surging, this time I decided to reach out to a banker who knows how to play golf but is also a whiz at making money. Meet Kevin Armstrong, banker and now author of 'BBBB – Bulls, Birdies, Bogeys and Bears' whom I caught up for an interesting chat.
What's the most complex part of the relationship between golf and investment banking? Is it really complicated?
I don't actually think the relationship is complex at all, at least as far as ebb and flow of markets and ups and downs of the fortunes in golf are concerned. There is no cause and effect at work in the relationship; rather both stock markets and golf are accurate and fairly immediate reflections of aggregate social mood. When mood is rising so do markets and it seems that the fortunes of golf and golfers rise too. What is really intriguing is that such a truly close relationship is only found between golf and the markets, not other sports like tennis, as I illustrated in the book, or cricket. The reason for this closeness may be due to the huge overlap between the participants in both 'Great Games', as both investing and golf have been described.
What virtue does the sport have common with business? Or is the connect overrated?
In the book I describe three of the traits that are essential for success in both fields and illustrate both with the examples of Jack Nicklaus and Warren Buffett, the two most successful exponents of golf and investing. Those are patience, discipline and humility. Both Buffett and Nicklaus clearly can be characterised by these, but perhaps the one that is most essential for truly enduring success in either field is humility. Golf is bigger than any individual and the moment anyone thinks they have mastered either field of endeavour they are almost certainly headed for a very rude awakening.
Do CEOs use the sport as a tool?
Some obviously do, it is said that you learn more about the character of an individual through one round of golf than any number of interviews or meetings. It is also the case that a round of golf gives anyone several hours of uninterrupted quality time with their playing partners. This can obviously be most useful in business. The other way that golf is used positively by senior executives is that it is a total escape. If you want to play your best you must be fully engaged with your game, you have to leave everything else back in the office. Sadly, CEOs don't always use the game appropriately as I describe at some length in chapter seven 'The closeness of the relationship, but sometimes it's too close'.
What's your hypothesis - when markets boom, golf booms too - based on?
The core hypothesis is just something I stumbled across. Tiger first winning almost $10 million in a year in 2000 coincided with the uproar that was emerging about the egregious salaries being paid to CEOs so I just wondered how CEO compensation had compared with pro golfers compensation throughout history. The only long-term record I could find of golfers earnings was the annual leading money winner total. When I downloaded that history and produced a chart it was a kind of 'Eureka' moment. Having spent my entire career following the US market I recognised the chart, I knew that the line had the same 'shape' as the prior 70-year history of the US market. When I superimposed the two on a similar scale the connection was obvious.