FIFA - Also Scores an Economic Goal

- Vikas Arora

Dear Investors,

The 2022 FIFA World Cup is here—hosted for the first time by a Middle Eastern country. The sporting spectacle, which is attracting hordes of football fans from across the world, is expected to contribute over $17 billion* to Qatar's economy.

By far, the most expensive World Cup ever, the country is estimated to have spent a staggering $218 billion* since 2010 to upgrade the infrastructure which includes a first time ever 40,000 seater transportable stadium, the Doha Metro, several 1000 kilometres of roads and highways, a new airport, a new city, and a new port. This is 15 times of what Russia spent for the 2018 event.

According to an Al Jazeera report, in the first 10 months of the year, the country has already seen foreign inflows of $4 billion. The Qatar Stock Market (QSE) has, in fact, outperformed its peers in the run-up to the mega sporting event. And this is expected to continue even a year after the tournament. Reports say that the QSE Index, which measures the 20 most liquid and largest stocks on the exchange, grew as much as 24.7% in the beginning of the year until April 2022. However, while it declined and flatlined for a while, it was up by 12.1% by October 2022.

The game of investing is a lot like football. You have to tackle your problems, block your fears and score points when you get the opportunity. Tactical analysis and planning are essential in football as well as investments. Let us see how tactics used in football apply to investment planning.

Do not put all your eggs in one basket
Football, like investments, is a game where the objective is to score goals, which is similar to creating wealth in financial terms. But at what cost? After all you have only 11 players (limited funds) on the pitch. The correct allocation of these players in defensive and offensive positions is essential to obtain the desired results. A right mix of equity and debt will ensure that you 'attack' and score (make capital gains) with your high-risk equity stocks and 'defend' (don't concede i.e. don't lose money) with your low-risk debt holdings or just pass and avoid diversification in low quality assets like Crypto and Digicoin which are not regulated by any central authority.

All-out attack or ultra-defensive
Taking calculated risks is an essential trait of any successful manager/investor. It is important to first establish what level of risk one is willing to endure. Is scoring lots of goals (high capital gains) important? Or will a draw suffice, which will ensure you don't lose the game? (Balancing risk-reward within your investments based on risk appetite)

Investors also face short-term dilemmas when they have a chance to hold on to their stocks and hope for a higher return or redeem their stocks and book profits immediately. Investors, like football managers, possess the option to “counter-attack” (buy aggressively when the markets are down) or play “possession football” (make conventional decisions and flow with the market).

Management styles
Football managers have their own trademark styles, which says a lot about their risk-taking abilities. Some might be conservative and might play with five defenders at the back (debt-oriented portfolios), while some might be more flamboyant and play with only three defenders (aggressive equity-oriented portfolios).

Gruelling fitness regimes and optimum nutrition have revolutionised the game. Similarly, stocks that give high returns and capital gains should not be extremely volatile and low-risk stocks should give moderate levels of returns on a consistent basis. Leaders in each segment and quality stocks tend to be winners all the way.

Realistic optimism
Football is a game of 90 minutes and until the final whistle blows, the manager has full faith in his players to deliver the desired results. Similarly, it is important to be pragmatic about one's investments and not expect super-fast results. There could be strenuous situations arising for an investor where he/she would not be certain about holding or selling their stocks. In such situations, an investment advisor can guide you and ensure your investments are well taken care off.

Portfolio review
Post-match analysis helps bring out any shortfalls that occurred during a game. These must be rectified to ensure optimum results for the games to come.

My last bit on learning from FIFA games, processes and team work wins. No matter how skilled or blessed you are, but if you don't follow best practices you don't achieve desired results. You can be fastest man on the planet but ball is faster than you. Here soccer teaches you in order to achieve individual brilliance you have to carry the team together.

At Ace Lansdowne it has been our endeavour to let your money work hard towards achieving the required GOALS. We are on the right TRACK.

Warm Regards and Keep Smiling.