Investment lessons with a pro - the front nine

On the weekend I was dealing with the law of large numbers, filling in my scorecard after 18 holes of happy amateur golf. I realised this matched the number of years I’ve worked at Platinum as an investment professional. Naturally, that got me thinking – what are 18 key lessons I learned over that time? Here’s my “golf tour” of investment wisdom…

Hole One: Par 4.  
“The reason it’s a cliché is because it’s true.”

I stole this line from a Lloyd Cole song. And it made me think of the great investment sayings.
 

• "Don’t put all your eggs in one basket.”
• “Price matters”. 
• “It’s only when the tide goes out you find who’s been swimming naked”. 

All cliches. All overused. All true. 


Hole Two: Par 3.  
Long term equity investment can solve the problem of saving for retirement. 

Equities can provide the inflation-beating returns that build the capital to replace your salary^.1 



Lessons from the golf course - about patience, risk-management and overconfidence - can help you retire more comfortably. 


Hole Three: Par 5.  
Investing is more about people than numbers. 

I used to think investing was about numbers, charts, calculations. But to be a good investor you need to understand a range of people. 

As investment managers we’re constantly trying to control our own investment biases. We must understand the people who are the financial markets – investors, traders, intermediaries.
 
We want to be confident about the managers running the companies we invest in. Just as importantly, we must understand their customers and their preferences and passions. Investing is, first and foremost, a people game. 


Hole Four: Par 4.  
The principal-agent problem is real.  Understand it.

I’ve met lots of fantastic advisers and stockbrokers. But there can be a wide gap between what you want and what your “agent” needs.  Incentives are not always aligned. 


Hole Five: Par 3.  
Overconfidence will kill you.

It’s as true in investing as it is in golf. 


Hole Six: Par 4.  
Good investing is “boring”. Avoiding big losses beats chasing big wins.

Good golf is about fairways and greens, not cutting corners and flying bunkers. As I mentioned above, investing long-term in equities can get you 6-9% p.a. – enough to generate real wealth. But make big losses chasing outsize returns and you’re playing catch up. And that normally leads to more bad decisions. 


Hole Seven: Par 3.  
Past performance is often inversely correlated with future outcomes and drives terrible decision making.

The past is the past. Leave it there.  Nothing hurts more than chasing investments because they performed well in the past. We always need to ask: “Will this do well over the next five years?” 


Hole Eight: Par 4.  
Big company executives are more like politicians than you think.

A key role of the C-suite is to promote their business. As a result, many of the CEOs and CFOs I’ve met focus as much on message as strategy. Their invariably well-crafted, well-rehearsed statements need to be carefully interrogated. 


Hole Nine: Par 5.  
Hype has a pattern

Investment managers deal with both economic cycles and hype cycles. 

Companies get over-hyped and over-priced. Or talked down and sold down. 

Understanding and recognising those hype cycles – and controlling the emotions they generate - helps you buy low and sell high.³


We’ll publish the second nine of Douglas’ 18 holes of investment wisdom next week. You can see the inspiration for this piece - his thinking on the difference between amateur and professional investing - in this article. 

1. Since 1900, US and UK equities have averaged an annual return over 9%. So have Australia’s. Source: UBS Global Investment Returns Yearbook 2025.  I explored this in detail in www.platinum.com.au/curious-investor-behaviour/solving-the-retirement-riddle
2. www.platinum.com.au/curious-investor-behaviour/buy-low-sell-high-sounds-simple-but-investors-ne