Very few people on this planet have earned the title of "greatest ever." In investing, many would argue that this distinction goes to Warren Buffett; in golf, it's Tiger Woods. But in this world you do not need to be the best to achieve success. However, we are fortunate that those who are considered the best have laid out lessons for us that can help us become more successful.

Both Warren Buffett and Tiger Woods do a few simple things spectacularly well to achieve their goals. While odds are quite high that you will never become Woods or Buffett, you don't have to in order to succeed. There are a lot of subtle yet critical similarities between golf and investing. If you pay attention to how they go about perfecting their craft, you can gain a lot of wisdom that will set you ahead of the pack.

Practice Makes Perfect
How Tiger Woods practices may be one of the most intriguing activities in all of sports. People are often advised that "practice makes perfect." In other words, continue to practice, practice, practice, and you will get better. While there's no doubt that practice very often leads to improvement, it's not practice that sets Woods apart; it's perfect practice.

When Woods is on the driving range hitting balls, he is not just hitting balls for the sake of it. Instead, he hits every single ball with a specific target in mind. Woods will hit 500 balls a day with a specific target for each one.

The parallel for investors is constant discipline. Many investors incorrectly invest just for the sake of investing - without any discipline or specific target in mind. As a result, new investors have no idea how to navigate the course or manage risk. Investors often buy most of their stocks with the same expectations - that the stock price will go up - without giving any consideration to the existing competition, the quality of management and the level of difficulty of the current market layout.

What It Takes to Win
When the course is easy - in a bull market - every shot you take looks like a good one. It doesn't seem to matter what price you pay, the favorable landscape makes you look like an expert. However, the real danger lies in the fact that the longer this persist the greater the likelihood that you begin confusing your investment acumen with what is really going on: favorable conditions. This happened during the internet boom in the 1990's and the majority of people never had a chance to cash in on their spectacular gains. In fact, many actually lost lots of money when things came crashing down.

When the investing layout is hard, as it is during bear markets and recessions, it's crucial to understand shooting par could likely be the long-term winner. As stock prices begin to rapidly rise, they often become riskier propositions, but most investors naively do not see it that way and continue to buy. Then when the course gets hard, the wrong lessons they learned on the easy course cost them dearly.

Invest with Purpose
Like Woods, investors should always invest with a specific target in mind. When stock prices rise dramatically without any regard for valuation, ignore the fact that some people may make superior returns over the next several months or year. Very often, the majority of those folks won't have the faintest idea when the goods times will end and all those profits will vanish.

Always invest with a specific target in mind. Be cautious when everyone is excited about buying stocks because that usually means paying a very rich price. Consider bonds, or high quality dividend paying stocks that usually don't attract as much excitement as the Amazons or Googles of the world. Sometimes shooting even par often produces the winning score.

Manage Your Expectations
There's a saying that goes "in order to finish first, you must first finish." There is tremendous wisdom in those words for investors. Success in investing is very often highly correlated to longevity. If you can navigate the market storms and not suffer catastrophic losses, then you are able to capitalize on the opportunities available when stocks prices are discounted. As is so often the case, many investment's funds go out of businesses when the markets collapse, which is the absolute worst time to exit the game.

Tiger Woods does a brilliant job of managing his expectations. He doesn't go out on Thursday focusing on the leader board and trying to come out on top that day. Instead he plays his game against the course, fully aware that it is the person who remains consistent during the tournament who usually comes into Sunday's round with the best chance to take home the trophy. Of course, during the course of play, Woods, like many investors, will often weigh the risk rewards of a difficult or low probability shot and make his decision based on the benefit gained.

Learn from the Best
Long-term success is not a result of luck. However, discipline and hard work often leads to opportunities that might not otherwise appear, and to outsiders this is often viewed as simple luck. Examine the approach of guys like Tiger Woods and Warren Buffett, learn from their successes and failures and you've already got a head start.

Related Articles
  1. Investing Basics

    Warren Buffett Biography

    Warren Buffett is probably one of the top investors in the world.
  2. Investing News

    How 'Honesty' Could Pay off for Jessica Alba

    Is it possible that Jessica Alba is one of the savviest businesswomen on the planet?
  3. Personal Finance

    The Future Outlook of the Golf Industry

    The popularity of golf peaked in 2003. To regain popularity and survive, the industry is adapting to appeal to a younger generation of players.
  4. Investing News

    Famous Celebrities Who Love Investing

    Celebrities have a bit of a bad reputation these days. These five celebrities, though, have used their fame and their money to invest successfully instead of spending it on looking good.
  5. Stock Analysis

    Warren Buffett's Latest Bet: The Riskiest Yet?

    Warren Buffett just made the biggest — and possibly riskiest — acquisition of his career.
  6. Professionals

    The Top 5 Richest Restaurateurs

    The top five richest restaurateurs have proven that it is possible to not only turn a profit in the restaurant business but to become multi-millionaires!
  7. Professionals

    The Top Six Richest Supermodels

    Through excellent investing, brand management and high earnings, these six supermodels have cultivated multi-million dollar net worths.
  8. Professionals

    Are Stock Buybacks Always Good for Shareholders?

    Stock buyback programs aren't always done with the interests of shareholders in mind. It's important to try to understand the motivation behind such moves.
  9. Entrepreneurship

    Nike and the NBA, a Perfect Duo?

    What does Nike's recent eight-year contract partnership with the NBA entail for its largest competitor Under Armor?
  10. Investing News

    Five Wildly Successful Value Investors

    Warren Buffett is not the only investor who has benefited tremendously from adopting Graham's approach to investing.
  1. Hole-In-One Insurance

    A product that offers financial protection to golf tournament ...
  2. Hunting Elephants

    The practice of targeting large companies or customers.
  3. Warren Buffett

    Known as "the Oracle of Omaha", Buffett is Chairman of Berkshire ...
  4. Merchandising

    Merchandising is any act of promoting goods or services for retail ...
  5. Buffett Rule

    A tax rule proposed in 2011, by President Barack Obama, stating ...
  6. Billionaire

    An individual who has assets or a net worth of at least one billion ...
  1. Why is Manchester United (MANU) carrying so much debt?

    The takeover of Manchester United by the Glazer family beginning in 2005 saddled the historic club with substantial amounts ... Read Full Answer >>
  2. What are Manchester United's (MANU) largest revenue sources?

    Manchester United is one of the most popular U.K. soccer teams. Its principal stadium is Old Trafford, located in the heart ... Read Full Answer >>
  3. Why did Warren Buffett invest heavily in Coca-Cola (KO) in the late 1980s?

    Warren Buffett found Coca-Cola an attractive investment because it had a moat and was attractively valued. Buffett began ... Read Full Answer >>
  4. Why does Warren Buffett largely avoid investing in the technology sector?

    Warren Buffett has often said that he avoids investing in the technology sector because he does not like to own stocks in ... Read Full Answer >>
  5. Does Manchester United (MANU) own Old Trafford stadium?

    Old Trafford Stadium was built for and is currently still owned by Manchester United Football Club (Man Utd.). This means ... Read Full Answer >>
  6. What's the biggest sports endorsement deal ever signed?

    According to Forbes, basketball player Derrick Rose holds the largest endorsement deal as of 2014; the deal is for more than ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!