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  • Writer's pictureMonmouth Capital

Q2 2021: Getting Through The Group Stage

I just love international football tournaments and I throw myself into them – Panini sticker books, wallcharts, the lot! This year I came up with a new innovation: the reverse sweepstake – every household in my (large) extended family got a different top team at random, as normal; but the winner buys everyone else takeaway…

Quite funny how much interest and debate this approach has sparked in everyone from my 79-year-old dad to my youngest nieces and nephews. Rationally, you want your team to lose, but, of course, there’s a joy in seeing them do well, even if it will cost you financially!

Whenever the Euros or World Cup come around, I feel obliged to wrangle them, somehow, into a story about investment. Sorry!

In the past, I’ve drawn parallels between good portfolio construction and team selection. That’s a pretty obvious one for us, given the importance we place on balance and risk management. (It can probably be summarised like this: You need both Raheem Sterling AND Declan Rice in your team.)

Something I haven’t focussed on so much is the importance of time in football tournaments. Many eventual championship winners start slowly, avoid major errors, get through to the knock-out stages and, all of a sudden, they can be one or two matches from glory.

Portugal, for instance, did not win a single 90-minute game until they defeated Wales in the semi-final of Euro 2016, which they eventually won.

The important thing, it turns out, wasn’t to dazzle in the first half of the tournament, but instead, simply to survive. If you are still playing in the third week of the Euros, you are doing well. Nobody will very much care about your performance in the first three or four games, as long as you didn’t get knocked out; we don’t look back at Portugal’s 2016 victory and say “yes, but they didn’t really play that well until the penultimate game”, do we?

The canniest international football managers will be asking themselves not “how can we score the most amount of goals in this group game?” but instead, “what’s the best way of avoiding defeat so we can get into the knockout stages?”

Similarly, we are not preoccupied with “how can we maximise returns in the next 6 months?” but instead, “what do we need to do to keep clients on track towards their long-term financial goals?”

We measure investment time horizons in years and decades, of course, but the principle is the same: if you are still invested after 5 or 10 years, if you’ve managed to avoid major errors, you are very likely on track to a successful outcome. Whether you shone in one period or another is irrelevant.

As I write this, we are in the final stages of Euro 2020. And I always find this time in a tournament bittersweet: the games are more intense and meaningful than ever, usually with the top teams and stars battling it out; yet you know that the number of games remaining is dwindling rapidly and it will all soon be over. Let’s enjoy it while it lasts and, of course, come on, England!

- FS


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