Bloomberg Businessweek (North America) - - Advertisem­ent - —Jeremy Law­son, Chief Economist, Stan­dard Life In­vest­ments

One of the more fa­mous one-lin­ers in golf his­tory is said to have oc­curred when Ben Ho­gan was asked the key to un­der­stand­ing a per­fect golf swing. “The se­cret is in the dirt,” Ho­gan said. One could say the same about Big Data’s role in mod­ern in­vest­ing. Iden­ti­fy­ing the right data in a haystack of it, and ap­ply­ing the proper anal­y­sis to it, takes com­mit­ment and hard work. Anal­y­sis is a key tenet of what drives in­vestor suc­cess at Stan­dard Life In­vest­ments, and it will play an im­por­tant role at the highly an­tic­i­pated Ry­der Cup, in Septem­ber, which pits the best golfers from Europe against the best from the U.S.

With its fo­cus on sus­tained de­liv­ery of world-class per­for­mance and its abil­ity to ÀQG SRWHQWLDO WKURXJK LQWHOOLJHQ­W DQDO\VLV 6WDQGDUG /LIH ,QYHVWPHQWV LV D QDWXUDO ÀW DV WKH ÀUVW :RUOGZLGH 3DUWQHU RI 7KH 5\GHU Cup, the bi­en­nial match play event that will take place at Hazel­tine Na­tional Golf Club, in Chaska, Min­nesota. Team cap­tains Dar­ren Clarke (Euro­pean Team) and Davis Love III (U.S. Team) will look to data anal­y­sis to help de­ter­mine who plays on their teams, whom WKH\ ZLOO SDLU WRJHWKHU RQ WKH ÀUVW WZR GD\V LQ four­somes and four-ball, and to help shape over­all strat­egy.

Anal­y­sis part of strat­egy

As the head of the Euro­pean Team, Clarke is keenly aware of the role data and anal­y­sis will play in his de­ci­sions. “If you’re not an­a­lyz­ing the data avail­able at the mo­ment, then you’re putting your­self be­hind the eight-ball,” says Clarke. “For ex­am­ple, you’re look­ing for the guys who are con­sis­tently hol­ing putts from that 3- to 10-foot range, be­cause those are very im­por­tant in match play. Anal­y­sis of data is also a vi­tal in­gre­di­ent in get­ting our pair­ings rightly matched up.”

Love III re­calls a time in his own ex­pe­ri­ence as a player that could come in handy at the helm of the U.S. Team. “When Tom Lehman was the U.S. cap­tain in 2006, I had to tell him not to pick me be­cause I was hurt,” he says. “To prove to him­self that I was, he’d go out and watch me play. I’d see him out there try­ing to avoid be­ing seen by me. Now, if a player comes to me and says they are hurt or re­cov­er­ing from an in­jury, I can go look at his per­for­mance data. For ex­am­ple, I can look at ball speed he’s gen­er­at­ing off the club­face and com­pare it to times when he was healthy.”

Both cap­tains agree that the younger play­ers they will be lead­ing at The Ry­der &XS DUH YHU\ DWWXQHG WR WKH EHQHÀWV RI us­ing data and anal­y­sis to im­prove per­for­mance. How­ever, they also rec­og­nize there’s a right way to go about dis­cussing data anal­y­sis with play­ers.

“As a team leader, you don’t want to tell play­ers that their per­for­mance is weak in a cer­tain area so they should be work­ing on that part of their game,” says Love III. “To­day’s play­ers will al­ready know that. As a cap­tain, you’re more likely to use it to ERRVW FRQÀGHQFH ¶/RRN DW \RXU QXPEHUV You’re play­ing great. Just re­lax and go play, \RX·OO EH ÀQH ·μ

Clarke and Love III agree that part of the chal­lenge in mak­ing de­ci­sions that will af­fect WKHLU WHDPV LV ÀQGLQJ D EDODQFH EHWZHHQ their in­stincts and the most telling data. Some data is well-con­structed, but much of it is just noise. And even good data is of lim­ited value un­less you can prop­erly an­a­lyze it. Stan­dard Life In­vest­ments faces a sim­i­lar chal­lenge on be­half of in­vestors, but its deep knowl­edge and ex­per­tise help sharpen its fo­cus on ap­ply­ing so­phis­ti­cated an­a­lyt­i­cal ap­proaches to tease out the true re­la­tion­ship be­tween vari­ables.

“A lot of the work that we do is try­ing to iden­tify deeper fun­da­men­tal re­la­tion­ships EHWZHHQ HFRQRPLF LQGLFDWRUV ÀQDQFLDO in­di­ca­tors and as­set re­turns,” says Jeremy Law­son, Chief Economist, Stan­dard Life In­vest­ments. “We think about how the cor­re­la­tion struc­ture might be chang­ing over time, and then we think about what that means for the fu­ture. If we think a po­ten­tial in­vest­ment could be un­der­val­ued, we think about how can we take ad­van­tage of that.”

Law­son and his col­leagues at Stan­dard Life In­vest­ments have rec­og­nized that it’s nec­es­sary to deepen the tools and in­di­ca­tors they use to drive their think­ing on global mar­kets and the outlook for re­turns. For ex­am­ple, over the past few years it has be­come more ac­cepted that the eco­nomic-growth data that FRPHV RXW RI &KLQD LV ÁDZHG DQG GRHV QRW fac­tor in enough volatil­ity. As such, it’s not a very reli­able guide to how quickly China’s econ­omy is grow­ing.

“We’ve taken hun­dreds of eco­nomic and ÀQDQFLDO GDWD SRLQWV SXW WKHP WRJHWKHU DQG found a way to ex­tract an in­di­ca­tor of China’s eco­nomic ac­tiv­ity,” says Law­son. “We be­lieve this gives us a more reli­able real-time in­di­ca­tor of how the econ­omy is evolv­ing. For ex­am­ple, we re­cently no­ticed that the econ­omy slowed in 2015 much more agJUHVVLYH­O\ WKDQ RIÀFLDO GDWD LQGLFDWHG 0RUH re­cently, with stim­u­lus that has been put in place, we’ve been able to track im­prove­ment in those un­der­ly­ing in­di­ca­tors.”

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