Bloomberg Businessweek (Asia)
Leveraging Data to Find an Edge
Whether on the golf course or in the markets, the line between stardom and mediocrity is razor-thin—and data analysis is a key differentiator
When competing at the top level in anything—especially when money is involved—the difference between being king of the road and middle of the pack is generally miniscule. Consider this stat from the PGA TOUR: At press time, the difference between the players ranked No. 1 and No. 30 in scoring average was a mere 0.946 (69.731 to 70.677), or less than a single stroke per round. Yet that disparity equated to a nearly $4 million gap in 2016 earnings between the two players.
Finding that edge is what keeps professional golfers awake at night. In the days before Big Data came to the game, this largely meant replaying rounds in one’s mind, trying to intuit patterns: Am I coming up short on approach shots? Pushing drives? Pulling putts? Today, there is a more HIÀFLHQW ZD\ WR PDNH XS IRU WKDW ORVW VWURNH
Deep data dives
Using robust data technology, such as the PGA TOUR’s ShotLink System that tracks every shot by every player in every round, the opportunity now exists to be far more objective about one’s performance. In golf, as in investing, however, the trick is focusing on the meaningful data, rather than on mere noise.
“You want to look underneath the scores,” says Mark Broadie, a Columbia Business School professor and a pioneer LQ WKH ÀHOG RI JROI DQDO\WLFV ´<RX QHHG WR control for other factors to understand the information content of the scores.”
Data analytics has already demonstrated its clear utility as a diagnostic tool. Players whose stats are weak in a certain area— approaches from 225–250 yards, for example, or right rough avoidance—now use this information to guide their training and alter their practice routines.
Big Data isn’t only impacting technique and psychology, but also course strategy. Whether on their own or with one of the number-crunching gurus beginning to appear within the players’ inner circles, top pros are now applying data analytics to decide, for example, whether to use a driver or a safer 3-wood off the tee on certain holes, which pin positions on a particular green to attack, or which par-5 holes are best attempted to reach in two shots versus WKUHH³DOO RI WKLV WR ÀQG WKH VOLYHU RI HGJH on which outperformance rests.
Avoiding the rough in investing
This strategic approach is familiar to 6WDQGDUG /LIH ,QYHVWPHQWV WKH ÀUVW Worldwide Partner of The Ryder Cup, the biennial match-play event between the U.S. and Europe that will take place in September at Hazeltine National Golf Club, in Chaska, Minn.
Standard Life Investments is well known LQ (XURSH DQG WKH 8 . DQG LQ WKH ODVW ÀYH years it has doubled its global client base, expanding its footprint to the U.S. and beyond. Much of that success is due to an approach that emphasizes—like The Ryder Cup—melding highly talented individuals
into a cohesive unit that prioritizes the prosperity of the team.
“The Ryder Cup features the best of the best players, but individual skills will not decide the winner,” says Jack Boyce, Standard Life Investments’ Managing Director of Distribution for North America. “We believe that working as a team is what gets real results, and is what drives investment success.”
Where amateur golfers quake when contemplating a fearsome shot over water to a tiny target, pros see the chance to VHSDUDWH WKHPVHOYHV IURP WKH ÀHOG ,QYHVW ment professionals likewise recognize the opportunities presented by volatile markets. Identifying misalignments when fear reigns offers the chance to make money when others are keen to pull back.
“You need to identify the right data to answer the question you’re interested in,” says Jeremy Lawson, Chief Economist, Standard Life Investments. “There’s more data than ever to access, but not all data is true information content. And that data means nothing unless you can analyze it using sophisticated empirical and analytical approaches to tease out the true structural relationships between variables.”
In trying to ascertain the deeper connections between various economic indicators and asset returns, and how those correlations might be changing over time, Standard Life Investments continues to develop its own analytical tools. The company’s powerful, SURSULHWDU\ ÀQDQFLDO VWUHVV LQGH[ IRU example, takes in vast amounts of market information—volatility, credit spreads, liquidity, macro data, among numerous other variables—and summarizes how the PDUNHW LV EHKDYLQJ (YHQ PRUH VLJQLÀFDQWO\ it contains forward-looking information about how economies are evolving and what the environment may look like over WLPH 2Q WKH IDLUZD\V DQG LQ WKH ÀQDQFLDO trenches alike, using data to make sense of recent history can lead to hazards avoided and a more prosperous future.
“There’s more data than ever to access, but that data means nothing unless you can analyze it using sophisticated empirical approaches.” —Jeremy Lawson, Chief Economist, Standard Life Investments