4 things an investor can learn from FIFA World Cup – 2018
FIFA World Cup has been a rage globally.
Whether you are 17 or 70, the football world-cup had grappled your attention like no other sport.
In the FIFA World Cup 2018, multiple global investment banks have gone wrong with their prediction of the winner, based on data and algorithm.
An interesting thing that unfolds here is that it is nearly impossible to forecast what will be the outcome on a particular ‘Match Day’.
Irrespective of the amount of data available, the probability of being right can never be 100%.
While the World Cup brought in surprises for fans at every stage, it undoubtedly taught some interesting lessons which can be applied to investing.
This theory of unpredictability can be applied to markets as well. Not even ace investors like Mr. Jhunjhunwala can predict what exactly is lined up in the market the next day.
Undoubtedly, with the kind of experience and knowledge he possesses, he can anticipate the movement and accordingly prepare himself but predicting accurately is impossible.
In this article, we seek to discuss the learnings from FIFA 2018 that should be adopted while taking investment decisions
Lessons learnt from the FIFA World Cup – 2018
1.Make the most of your home ground
Typically, you would have seen teams scoring more goals in home ground.
A similar thing is generally seen in cricket, isn’t it?
During FIFA 2018, Russia who was the host made the best use of this opportunity given their familiarity with the ground, crowd, etc.
How is it related to investing?
A similar thing works in the capital market.
Occasionally, there would be times when everything works in your favor.
This is the time to increase your risk appetite moderately and take the benefit of time that is apparently working in your favor.
2. Don’t depend on the stars to perform
If we talk about FIFA 2018, Argentina is a classic example.
Inspite of having a player like Lionel Messi on their team, their performance was not great.
How is it related to investing?
In the capital market, your portfolio might have some of the best names, but never bank upon those to perform all the time.
For example, Motilal Oswal MOST 35 Multi-cap was one of the best funds in 2017, but it started to show signs of volatility in 2018.
Always remember that not all winning bets work.
With good scrips/funds in the portfolio, you only have a lifeline support, but you should not remain dependent on them.
Having a balance in the portfolio is important to ensure you remain shielded from volatility at all times.
3.Seize the moment
In FIFA 2018, the Brazilian fans were unnerved, when the score was level with Costa Rica.
However, a brisk moment helped Brazil snatch the game taking a lead in the last minute.
How is it related to investing?
A similar moment occurs in trading and investing as well.
In the capital market, a trader can make maximum money in a matter of minutes.
You could also lose a heavy amount of money in a matter of few seconds.
For example, one cannot deny the volatility seen in stocks like PC Jeweller/Vakrangee.
We believe an investor should be prepared for any such instances and accordingly take action.
Should there be a situation that volatility is larger than expected, try to hedge the risk.
It is always better to remain protected than to lose out.
4. Bouncing back is possible
In FIFA 2018, Switzerland made a good comeback despite its opponent Serbia took the lead.
While we agree that winning doesn’t seem a reality if you are lagging behind, it is not impossible to overcome.
How is it related to investing?
Should there be a situation that your portfolio is underperforming the benchmark, don’t lose heart. Go back to the drawing board and check if the fundamental thesis behind your investment is intact.
If the thesis remains intact, have faith in your position, else take corrective measures.
Believing in your approach and your investments and bouncing back will not seem difficult.
Conclusion
To conclude, we believe that FIFA 2018 is a good eye-opener for many across the globe.
The World Cup witnessed many underdogs that rose to perform well and many experienced teams exited the initial rounds.
Thus, we believe that if you have patience and can be calculative, you can be a good investor.
Happy Investing!
The views expressed in this post are that of the author and not those of Groww