3 Investing Lessons From FIFA World Cup 2018
Don’t get me wrong, punters. This article is not about betting strategies for football matches. This is about the parallels that investors – in the investing universe – can draw and learn from watching the World Cup.
Fundamentals Can Change
Argentina, Brazil, Germany, Portugal and Spain were supposedly the top contenders for this World Cup. These former winners of the quadrennial event, however, were eliminated sooner-than-expected in the playoffs.
Whether in life or in businesses, the reality is always dynamic. Past performance is not always indicative of future successes. That said, we are not saying that fundamentals aren’t important. We mean that investors should always monitor about changes to a company’s fundamentals. After all, players can retire and management can reshuffle. Even the location of the event can affect the players’ performance. What’s more for businesses expanding into different geographic regions?
This brings us to our second point.
Underdogs Can Surprise
If there is one important lesson to learn from this World Cup, it is that underdogs can surprise and outperform too! Taking the world by surprise, both Belgium and Croatia managed to beat the Englishmen, with Belgium taking the third spot and Croatia heading into the finals.
Who knew that these two underdogs would go so far in this World Cup! Even betting sites (and Singapore pools) assigned rather good odds to bet on them. Nevertheless, this narrative encourages investors to look for more obscure and less “obvious” counters. Their returns can potentially be more rewarding.
Go For Consistent Performers
Had Croatia beaten France in the Finals, the article would really go along the underdog narrative. But France emerged the champion, beating Croatia in a 4-2 fashion. But football fans would know that France has been a consistent performer in the World Cup tournaments.
In the past four seasons – 2002, 2006, 2010, and 2014 – France managed to go into the quarter-finals stage once and another finals stage. Finally, France rose to the occasion in 2018 and bagged the World Cup trophy home this year. Perhaps they have the right formula.
Sure, we all love growth, but growth is hard to project. As such, a majority of investors’ portfolio should be banked on great and stable companies. Just like France National Football Team, consistent healthy financial performance is a hallmark of a great company. Even better if the company consistently delivers growth in dividend payouts!
