I started watching football as a kid and have vivid memories of the 2002 World Cup, which was the first World Cup I ever watched. Since then, I have religiously been following every tournament, embracing the wonderful atmosphere as fans from around the world gather to watch their countries compete in the greatest sporting event known to mankind. What draws me to this fantastic experience is the power of football to unite fans from every corner of the world to put their differences aside for ninety minutes to fitness football’s sporting marvel. Being a huge fan of the World Cup and a passionate investor myself, here are some lessons I feel investors can learn from the sport.
1. Just like a World Cup match, investments can go either way
One factor that makes the World Cup so exhilarating to watch is the unpredictability of the tournament. Throughout the years, we have seen underdogs defying the odds to emerge victorious in matches when nobody thought that they stood a chance. The example which comes to my mind is during the 2002 World Cup, where hosts South Korea reached the semi-finals of the tournament after overcoming juggernauts Italy and Spain in the Round of 16 and Quarter Finals respectively. At that time, nobody gave the small Asian team a chance against the best players playing in the top leagues in Europe. Yet, this team of determined individuals overcame the challenges they not only make their own nation but the whole of Asia proud of their success.
Likewise, the outcome of investing can often be good or bad for investors, either causing them to grow or lose their hard-earned money. This is because investments often involve a certain level of risk or uncertainty, leading to the possibility of earning rewards. While nobody can predict the probability of this outcome for certain, it has been proven that staying invested in the stock market is better than trying to predict the bottom of the stock market. By missing the top 10 days in the market, you risk missing out on more than half of the total returns of staying invested, according to data from Bloomberg. Therefore, patient investors who can remain unfazed by market volatility increase the chances of achieving better returns than those investors who panic sell when seeing bad news.
2. They are also an emotional rollercoaster
This leads me to my second point which is that just like World Cup matches which are full of spectacle and marvel, investments also lead to ‘animal spirits’ or wild swings between optimism and pessimism. Unfortunately, investors who try to time the market often end up getting it all wrong, buying when stock prices are near their peak and selling near their bottom.
As I mentioned earlier, rather than getting stuck on the emotional rollercoaster, investors who can ride through volatility and stay invested in the stock market will be more likely to compound their wealth over time. 2022 has not been a good year for stocks and you might be tempted into thinking that the worst is yet to come but staying invested in the market with the proper discipline will allow you to have a better chance of achieving your financial goals.
3. Community is key
Just like how football fans from around every 4 years to celebrate the glory of the world cup, investors should also organise events and gatherings to share their investment ideas and philosophies on the market. I got this idea from Warren Buffet’s Value Investors Club where he and a group of well-known investors gather to share investment ideas with one another. I think having a community is important as it develops a sense of belonging among members. Oftentimes, we may feel discouraged or demotivated when our investments don’t perform well. Therefore, having a community where individuals can share their investment ups and downs can serve as a form of emotional support.
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