After a captivating and nail biting final in Russia which delivered all the thrills, drama and tears fans on both sides expected (and then some!), are there any investment lessons to learn from this World Cup?
A few spring to my mind:
- Act as one – the power of the collective trumped the individual. France featured a myriad of talented players in different areas of the pitch but in the end what took them over the finish line was simply that they were the best collective in Russia. The individual brilliance of Messi, Ronaldo and Neymar was not enough to carry their respective teams past the quarter finals. Instead, in the case of France (and Belgium), star players sacrificed personal moments of glory for the good of the team. At Kames, we have individual talent in abundance but we believe a small cohesive group of equity investors with real collective spirit and quick decision making is the winning set up in the long run.
- Act responsibly – with clear ownership and accountability. With a small team of 11 players, there’s nowhere to hide in the field. Equally, in ‘people businesses’ like ours, small can be beautiful. In a small team, every team member must pull their own weight and perform in their role; it’s obvious if they don’t.
- Stick to your guns, follow the process stupid! Croatia went behind in every knockout game but never looked flustered and by sticking to their tactics they were able to battle back each time and reach the final – not bad for a country with a population less half the size of London. In sports as well as in the investment world, there will be plenty of soul searching, nail-biting moments when things don’t go your way. To stay strong in challenging moments, discipline is key. Having the confidence to follow your process when volatility hits will see you through most of the times.
- Drawing lessons from defeat – the Euro 2016 final loss for France was often mentioned by the players and coach as a powerful driver for the success of this World Cup campaign. Equally, markets have a unique way of reminding even the most experienced investors how fallible they can be now and then. Wrong calls will happen, but these times are great opportunities to learn and increase your scoring efficiency going forward.
- Act with conviction, data is not enough! With the mind blowing prowess of AI and the power of data analytics, one would be easily forgiven for believing sophisticated statistical models are the new paradigm in prediction. Before the World Cup, a number of global investment banks developed sophisticated computer models with huge data sets to predict the future world champions via the power of data analytics. Unsurprisingly, however, most of the big banks’ predictions have been embarrassingly wrong. At Kames we combine quant tools, powerful screening and optimisation tools, with a qualitative overlay to have the best of both worlds – science and art. But in the end, a human with strong conviction makes the call.
- Management is critical – the French coach, Didier Deschamps is largely credited with inspiring French players to put the collective first, show discipline and determination throughout the whole competition. By carefully planning and doing his due diligence before each game, he helped his players confront any situation in the game. At Kames, we invest in management teams as well as businesses. Coupled with our strong heritage in active stewardship, we assess the quality of the leaders behind the businesses, as they are key to seeing our investment cases play out.
Opinions and views from the Equities team at Kames Capital are not an investment recommendation, research or advice and should not be considered as such. Content discussing investment strategies and stocks is derived from and solely relates to the investment management activities of Kames Capital.
About the author
Luc Simoncini is a senior investment specialist in the equities team, with responsibility for providing client support and representing the firm’s equity capabilities to clients, consultants and prospects. He joined us in 2014 from Mediolanum where he led the marketing and client servicing team in Europe. Prior to that, Luc was a Client Portfolio Manager with Schroders in Australia covering global equities and was a senior investment specialist for Pioneer Investments, specialising in emerging markets. Luc studied Business Studies at Institut Supérieur de Gestion, Paris and holds an MBA from Macquarie Graduate School of Management, Sydney. He has 23 years’ industry experience*.
*As at 28 February 2018.