With the FIFA World Cup over, it goes without saying that investors could learn a lot from the world of sports...
 
Montfort's head of financial planning comments that as humans, we like to attribute success to hard work, intelligence, teamwork, skills, etc. On the contrary, we rarely admit or merit the role that luck can play in an outcome. This is true in sport, investing and general life too, however, as rational decision makers, this should be acknowledged more. That is not to say we should become sceptics of someone’s success, however, we should instead appreciate the range of outcomes we may be exposed to.

For example, the link between Cristiano Ronaldo's work ethic and success is inarguable and so we of course accept and expect his fellow Portuguese team mates should direct the football to him at the most-critical points of a game. This is further supported by the works of behavioural scientists, such as Daniel Kahneman, whose seminal book Thinking Fast and Slow defines the 'hot-hand fallacy' and the dangers of extrapolating luck. Cristiano Ronaldo’s long-term record illustrates that as a player, he will score in around 7.3% of all free kicks he receives; a lot higher than the average midfield player, however hardly a guarantee. Yet, if Ronaldo scores in the World Cup, as he did against Spain this year, many consider this outcome was simply well-deserved to result in a heightened confidence in his next free kick.
 
This is no more evident than the off-pitch action offices worldwide experienced in their traditional sweepstake competitions. You can imagine my own elation when by some miraculous luck, I drew a 'good' hand by randomly picking global heavyweights Brazil and Uruguay. I was very confident the sweepstake would pay to my advantage with confidence and prediction often hand-in-hand. I was proven wrong. This is an example of how we are all too eager to seek certainty, but in football, as well as investing, it is extremely rare that we are able to predict the outcomes. If we could learn one lesson from this, it must be that our short-term predictive abilities are incredibly poor.

So, rather than trying to ascertain the current or next-best star performer, stock or asset class, we should focus on the conditions we can control or what we know with certainty are likely add to returns.
 
As global financial planners specialist in providing cross-border solutions across investment planning, a confidence and certainty in global markets is undoubtedly key. As the pillar of our investment process, discover further illustrations of our approach within the Montfort Investment Philosophy.

 

To discuss your global investment interests with a member of the Montfort team, please contact Montfort's head of financial planning. Eugen Neagu, also head of Montfort's Investment Committee - eugen.neagu@montfort-intl.com; montfort-intl.com


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