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Take a risk - keep aiming for a perfect shotIT INTRIGUES me that I continue to play golf no matter how poorly I do so. Perhaps the lure of the game lies in the ability of even the worst players to strike that magical shot when everything clicks. The ball flies to its target and your playing partners shout their congratulations, usually, in my case, in amazement rather than admiration. This reality plus my advancing years has got me thinking about golf as a reflection of a great deal else. Life itself is a highly imperfect matter. As with golf, there are disasters and triumphs. No matter if you are a powerful politician, a captain of industry or a bus driver you will experience good and evil, triumph and tragedy. You will suffer and you will rejoice. But most of us will want to go on living as long as we can in the full knowledge that pain, anxiety, loss and fear are part of what we must experience if we are to stay alive. On a recent television business programme a tip appeared on the screen which read: "Never invest what you can't afford to lose." This struck me as nonsensical. It was akin to saying don't play golf because you are guaranteed to make bad shots. Or don't continue living as you know it means you must suffer. What this little slogan did not do was to define what it is to invest. Putting your money in the bank is an investment. If after-tax interest rates are below the rate of inflation (which is invariably the case) then your safe investment in the bank will result in a loss of wealth as the purchasing power of your money decreases. There is no escape from the necessity to make investment decisions, some of which, it can be absolutely guaranteed, will be wrong. This is why so many people make excellent livings managing other peoples' money. Most of us are too busy and too ignorant to look after our financial affairs so we pay others, such as mutual fund managers, to do it for us. Basically, what these managers do is seek a spread of investments to provide diversity in the portfolios they manage. Mostly they hunt as a pack, running after the same shares and bonds and generally making the same mistakes and gains as everyone else. I know a lot of rich people and not one of them got that way through diversification. They either backed themselves with most of their assets or they backed a few others in whom they believed. This approach requires the player to assume great risk. In the pursuit of great wealth, many are called but few are chosen. Studies have revealed that most people are risk- averse. Only a tiny fraction of people wish to assume responsibility and the risk that goes with it. Of course, most will want the rewards without the risk and responsibility. This is like wanting to hit a good golf shot without the ball, which has a terrifying propensity to shoot off, as do stock markets, in all kinds of unexpected directions. Thomas Aquinas wrote: "God made man in the beginning, and left him to make his own decisions; otherwise advice and encouragement, directives and prohibitions, rewards and penalties would all be pointless … what we choose is what best serves our goal … and since goods and goals are objects of desire, choice must fundamentally be a sort of desire and freedom an ability to desire." Sadly St Thomas does not dispense investment advice. In my view, the soundest comes from the Torah: one third each in property, stock and cash. I leave you with the words of that sublime sports writer Grantland Rice: "Like life, golf can be humbling. However, little good comes from brooding about mistakes we have made. The next shot, in golf or life, is the big one."
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