He wore his Sunday best.
It was Sunday, at the Masters. In Augusta, Georgia, little appeared normal. There were no patrons lining each hole, no glorious spring flowers, and then… something extraordinary happened.
Tiger shot ten.
Now to the uninitiated I must point out here that I am not describing the 229,417,633rd mass shooting in the US.
Instead, I’m describing a “black swan” of sorts.
Tiger Woods, the greatest golfer of the last few decades, who has won this annual Masters tournament five times, broke the wrong kind of record.
On a par three (seen below), where usually only three shots are needed… he took ten.
Source: The Masters
A statistician or quant, basing their prior analysis on every previous shot, hole, round and tournament Tiger had played in, could not have foreseen such a thing.
Kind of like how most of the risk models at quant funds and hedge funds didn’t foresee the 1987, 2000 or 2008 crashes.
Why? Because they based their assumptions only on things which had happened, which naturally doesn’t include all the things which could have happened, or could happen in the future.
In his entire, illustrious career, in which he might’ve played 150,000 competitive shots or more, Tiger has never ever taken more than three shots above par on a single hole at the Masters.
In that instance, he took eight shots on a par five – so three above expected.
Yesterday, he took ten shots on a par three. Seven above expected.
What happened was unprecedented, and unpredictable using most quantitative measures. You probably would have said “impossible” if it were suggested before the event.
The thing is, what happened immediately afterwards might be even more surprising…
If you only base your analysis on what has come before, you will never survive the true black swan events, which occur for the first time ever in the future.
True diversification doesn’t just survive the last crash – it survives all possible crashes.
That’s how many, supposedly highly analytical and risk-conscious funds went bust in the 1990s or 2008. They based their estimations on possible losses or risks only on the worst things that had ever happened – world wars, plagues, black Mondays and black Tuesdays…
(By the way – lots of things labelled “black” here with negative connotations… As someone who considers language important, I think this is something worth noting.)
But as I say, the story doesn’t end there.
For as soon as he had collected his thoughts from his extraordinary loss, he went on to do something equally unprecedented.
He immediately played the best golf he had played all week. Possibly all year, maybe… ever?
After taking ten shots for the par three 12th, he then completed the next six holes, a par total of 25, in just 20 shots (five under expected).
Five holes completed “under par” out of six. According to the commentary given during the live coverage, never before had Tiger achieved that feat on holes 15, 16, 17, and 18 in the same round.
Having been only three shots under par in 65 holes, before his nightmare at the 12th, he followed it up by scoring five shots under par in just a six-hole stretch.
It’s genuinely hard to say which episode was more extraordinary.
But the interesting thing to me is that they are connected.
As a man with incredible skill, and will, he responded to the gut-punch on 12 with incredible out-performance.
Like the stockmarket in 1987, an unprecedented one-day crash was followed by the best decade of returns anyone could remember.
Now, having stuck with me through fat and thin (get it?), take a look at this chart, and see if you draw the same connection with yesterday’s golf as I did… It’s of the US ten-year Treasury (government bond) yield.
Do you see what I see? Are you thinking what I’m thinking?
In March this year, markets “took ten shots on a par three”.
Stocks tanked, and the yields on government bonds collapsed. The interest rate return for buyers of ten-year Treasury bonds reached all-time lows – around half a per cent.
But since the start of August, the 13th hole you could say, they are up over 80%.
How strongly will this trend continue to the end of the year? Will Tiger come for the T-bills?
Like him, they have responded to collapse and calamity with a surprising burst of strength. Momentum as just as important in golf as it is in the market – so if this trend picks up steam, it could be very significant.
If you want to know what rising bond yields means, how they could threaten your savings but offer opportunities too, then read more here…
Charlie Morris, legendary fund manager and editor of The Fleet Street Letter Wealth Builder (one of the oldest financial publications around), has developed a very intriguing “Money Map”, which looks at the relationship between interest rates and inflation, to help guide investors through the murky waters of modern markets.
It’s a brilliant way of looking at things, as these two metrics are so incredibly significant, and yet so poorly understood.
All the best for now,
Editor, UK Uncensored