Discovering Investment Wisdom from FIFA 2018

Pratik Shah was having the worst of the market turbulence. The combination of a weak rupee, trade war and mid-cap valuation concerns had made the markets extremely volatile. That meant stop losses were frequently getting triggered and he was slowly but surely depleting his capital. That was one side of the problem. His long term investment portfolio was loaded with banks and they were not doing too great. He was still positive on banks for the long term but to see his portfolio in the negative was really hurting. That was when Pratik decided to tune into the France-Uruguay quarter finals. As he saw the clinical French get the better of Uruguay, he realized that the match was holding some of the answers for him. In fact, as Pratik rewound to previous matches, he was gradually becoming clearer about where he was going wrong.

Handle volatility the way the French do

He realized that France had already scored a major victory over Argentina in the Round of 16 purely on the strength of better planning. Argentina, on the other hand, was overly reliant on Lionel Messi. You cannot handle volatility by depending on just one of your star players. That is exactly what was happening to his portfolio. His performance was too focused on a handful of sectors or a handful of themes. When the portfolio was not working or he was getting into trading losses, his focus should have been to play like the French. Have a series of strategies such that at any point of time one of them will work. Relying on the Messi and Ronaldo in your portfolio is not the answer. He had to adopt the French approach to his trading and investment activity.

How Russia handled the unexpected events

In the last few weeks, a lot of unexpected events had taken a toll on Pratik’s portfolio. Trade wars and a crash in the rupee were the least of the things he had anticipated. That was when he recollected the critical Round of 16 match between Spain and Russia. Spain was the clear favourite with its formidable reputation and its legendary game consisting of short passes (tiki taka). The game went into penalties and it was always going to be a toss-up. Goal keepers typically judge the direction and try to pre-empt the goal. That is when the Russian goalkeeper, Igor Akinfeev came up with some out of the box thinking. He got the direction wrong but still managed to salvage the situation with his out-of-the-box use of his feet. Pratik had been focusing too much on the turn of events rather than his game plan to pre-empt these events. Igor Akinfeev surely had a lesson for him.

Spread your risks both in trading and investing

Pratik was back to his quarter final match between Uruguay and France. On paper they were well matched but the only problem was that the Uruguayan team was overly dependent on the combination of Suarez and Roberto Cavani to give them the goals. With Cavani injured after the last match against Portugal, Uruguay just did not have an answer. Cavani had scored both the goals against Portugal and the combination of Suarez and others was simply incomplete. That was the mistake that Pratik too had made. He had created a strategy and was clinging on to it. Like France, he had to apply different permutations rather than get bogged down like Uruguay. The final result of 2-0 in favour of France was just a formality. Uruguay had lost the mental game long back. That is exactly what Pratik also risked doing. He needed to be more flexible and have a back-up plan in place. Above all, this back-up plan had to be constantly updated.

How Belgium did not lose hope or relevance

The match between Belgium and Japan was probably the most exciting match of the tournament. It has rarely happened in FIFA history that a team came back from 2-0 down to win the match in the most stunning fashion. By the middle of the second half, Japan was leading 2-0 and the Belgian fans had almost reconciled to being knocked out. But, not so the Belgian soccer team! They quickly regrouped and reworked their strategy. They realized that they had to make the best of the remaining 20 minutes without losing hope and optimism even for a split second. A concerted multi-flank attack ensured that the Japanese were confused and rapidly outplayed. The Belgian Red Devils managed to score three goals in succession. Pratik realized that had even a single Belgian player lost the hope and self-belief even for a brief moment, the game would have slipped out of their hands. That was a big takeaway for Pratik. He had let things drift and he was now losing his self-belief. That was not the answer. Pratik realized that Miracles don’t happen just like that and like the Belgians he too had to make it happen.