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Okay, so I won’t string you along too far into this blog post before answering the title question – No, I can’t predict the stock market by playing golf – one can dream, right?! That being said, a couple recent rounds I played did have a lot in common with historical market performance. Let me explain.

Over my last 36 holes I recorded two birdies, fifteen pars, and four holes with a score of seven or more, including the dreaded snowman eight. If that’s not volatility, then I don’t know what is. Here is the fun part, it all added up to one stroke better than bogey golf, which happens to be exactly what is expected based on my GHIN handicap of 16.5.

So how does this relate to the stock market? Consider the chart below which shows calendar year returns of the US stock market for the last 96 years. Returns range from -43.5% in 1931 to +56.7% in 1933. My golf individual hole scores over my last two rounds ranged from three to eight, and over my golf career from one to twenty-something. Furthermore, the average return of these 96 years of market history is +10.2%. If you look closely at the chart, you’ll see that there is not a single year to match the average return. In fact, only two years (1992 +9.8%, and 1993 +11.1%) were within 1% of the average. Similarly, on only six of my 36 recent holes did I score a bogey, which is what would be expected based on my handicap.

It’s also interesting to consider how we arrive at the results. The stock market can be all over the place, not just year over year, but also along the way. In those 72 positive years from 1926 thru 2021, the average drawdown of the market was -14%. This means that even in years where the market ended up positive there was a time where it was down a significant amount. The year-end return is one thing, but the journey always tells a story too. Again, my golf game is similar. Sometimes I hit the fairway and green in regulation, only to 3 or 4 putt for a bad score. On other holes I recover from a penalty off the tee to make par. All the golfers out there can surely attest to the fact that past performance is no guarantee of future results.

As I type this, the Russell 3000, which is a representation of the entire US stock market, is down 18.91% year to date. We’ve sliced it into a deep fairway bunker off the tee and been forced to chip out to the fairway to start 2022. It’s probably unlikely that we get up and down for par, but it’s not impossible. Maybe our approach finds a greenside bunker and things get tougher from there. No one knows exactly what will happen from here, just like no one knows where my ball will go when I have a 5 iron in my hands from 170 out.

The important thing to remember is that everything so far in 2022 is within historical context. It’s not fun to go through a market correction, but we know they are going to happen. The reasons why they occur are as unique as a single hole of golf. It’s easier said than done in the middle of it, but if we take a step back and remember that down markets happen, that they are a part of how normal markets function, then it may make things a little easier to stomach. Over the long-term the market goes up more often than it goes down. I only wish my golf game was as dependable as the long-term results of the stock market. Unfortunately, I’m certain I have more snowmen in my future than eagles.