Golfing Knights are rare but may be good for the market!

Last month, while travelling through the UK, I heard on the radio that Nick Faldo had received a Knighthood in the Queen’s birthday honours list, this did not particularly surprise me given his remarkable achievement in winning six majors, a haul only eleven players in history have surpassed. What did surprise me was that he was only the third golfer to be awarded a knighthood, the other two being firstly Henry Cotton in the New Year’s list of 1988 and secondly Bob Charles, in the New Year’s list of 1999.

Only three golfing knights throughout history highlights the significance of Sir Nick’s elevation and he clearly recognised this when he commented to the BBC;

“I am more than a little bit humbled to have been afforded this great honour. I believe I join Sir Henry Cotton as the only other British golfer to receive a knighthood so to stand alongside such esteemed company is incredible.”

He has received his knighthood far sooner than his illustrious colleagues. Henry Cotton’s Knighthood, whilst in the New Year’s list for 1988, was actually awarded to him shortly before he died on the 22nd December 1987 aged ninety. This was four decades after his first honour, an MBE, eight years after entering the World Golf Hall of Fame and more than fifty years after his first of three Open Championships in 1934.

Sir Bob did not have to wait as long. His Knighthood came thirty six years after his Open Championship victory but only six years after his last British Seniors Open title and seven years after his earlier OBE was elevated to a CBE. It was also awarded almost ten years prior to his recent induction into the Hall of Fame.

51 Year old Sir Nick was inducted into the Hall of Fame, like Sir Henry, prior to his knighthood, and unlike the other two, while he was competing on a regular basis, in 1997, and it also comes eleven years after he was awarded, like Sir Henry, an MBE.

All three golfing knights obviously achieved an enormous amount through three quite different careers that to a large extent spanned three quite different eras. Sir Henry’s career straddled the Second World War with major championships both before and after, but this was a wholely different time for the professional golfer. They were still, particularly in Britain, deemed to be servants of the members of the clubs they were attached to and when Sir Henry was winning Open titles the event still finished on a Friday so that the players could get back to their shops and their members on Saturday.

Golf changed with the advent of television and to a large extent the emergence of Arnold Palmer, the first global golfing superstar, this was the era that Sir Bob broke into, competing through the sixties with the then ‘Big Three’ of golf, Palmer, Nicklaus and Player. Sir Nick’s playing career, particularly his latter playing years, were closely connected to that of the current superstars; he was the defending champion at the Masters, who presented the green jacket to Tiger when he won his first major, in 1997.

The rarity of a new golfing knight, the historically close relationship between golf and investment that I have commented upon many times in the past, and the fact that the worst of the financial debacle of the last two years, at least as far as share markets are concerned, may have passed made me wonder whether there was any historical precedent for what investors can expect with the creation of a new golfing Knight.

Interestingly a few parallels do exist. Just as Sir Nick’s knighthood comes in the wake of enormous financial turmoil so did the other two. Sir Henry was awarded his knighthood just a couple of months after the great crash of 1987, the largest plunge in US shares in one day EVER and Sir Bob’s came during the immediate after math of a severe sell off following the failure and bailout of Long Term Capital Management, the largest hedge fund failure ever and one that seriously threatened the global financial system, and the Asian crisis.

Naturally this is all mere coincidence, however, it does raise the question about what investors can expect going forward and the past two knighthoods do give some reason for hope. In the twelve months after Sir Henry received his knighthood, and sadly passed away, global share markets rose almost twenty percent and in the twelve months post Sir Bob’s knighthood the returns were even better at more than 23%.

Clearly there is no connection between golfing knighthoods and investment markets. However, the best returns always come after a panic has passed but unfortunately at the depths of a panic it never feels like the right time to invest and by the time it is clear that it has passed markets have usually already risen substantially.

The last four months have delivered spectacular positive investment surprises; it is quite likely that the surprises will continue to be positive for some months to come.

Kevin Armstrong

28th June 2009