I probably spend more time thinking about the Psycological side of Investing than I do the financal so I find this an interesting discussion.
Before I retired, I was a farmer for 26 years and also an agricultural advisor for most of that time.
I’ve also played golf since I was 13 years old. At one point I considered a career as a professional but matters of the heart meant I was destined to marry a farmer’s daughter and ended up on the land. There is no pass time more noble than to provide food and fibre for the masses and I did enjoy making a living off the land, though not a very good one!
Whilst I would agree with most of the points jwrostagro27 listed in his Farming Analogy and I understand the comparison he is trying to draw, I feel compelled to share my experience as a farmer in relation to the “Macro”
In farming you have little control. You are mostly a price taker not a price maker, you are subjected to the vagaries of the weather, droughts, fires, floods and cyclones all have a devastating impact on your crop, your income and your life.
Then there are the disease outbreaks, fluctuating currency markets, cantankerous customers and government subsidised competitors. To the inexperienced this may seem an overly negative assessment and I’m happy to acknowledge that others may have a more positive experiences on the land than I but farmers face these problems every day and they are dominant and have to be dealt with.
I used to say to farmers in my advisory capacity that, “Farming is the art of making money whilst moving from one disaster to another” most agreed.
But, there is one thing farming did prepare me for and that was the difficult times, and in investing, handling difficult times is as important as anything.
I much prefer to think of investing in terms of a round of Golf.
· There is no such thing as a perfect round of golf but you can still get a good result.
· Some rounds are going to be better than others.
· Each shot you play can always be better with the exception of a hole in one.
· Holes in one only happen rarely and not everyone achieves one.
· One bad hole doesn’t necessarily ruin a round of golf but it will have an impact.
· A well thought out and executed round is very rewarding.
And my favourite golf quote from arguably the best golfer ever- Jack Nicklaus. “It isn’t the player that makes the most great shots that wins, it’s the player that makes the least bad shots.”