A rugby strategy can teach us investment lessons
Whether tackling the All Blacks or the markets, it calls for the same game plan.
As the Rugby World Cup continues to heat up in the run-up to the final next month, this could be a good time to take a hard look at rugby strategies, tactics and game plans and apply them to your investment journey.
Siyabulela Nomoyi, Satrix’s quantitative portfolio manager, says growing wealth has some similarities to winning a Rugby World Cup, where a number of factors are required – the right coaches, right plan, right team and right mindset.
He is not alone in this thinking. Braam Visser, business analyst at Allan Gray, points out that the similarities between a good investment decision and an effective World Cup campaign are apparent.
“Alignment and clarity between your philosophy (strategy and approach), process (game plan) and people (players) greatly increases your odds of success in both disciplines,” he says.
Nomoyi says some of the aspects of a good World Cup-winning strategy could easily be applied to your investment journey as follows:
Head coach: Strategy is everything
Just as rugby teams dissect their opponents and forge plans to increase chances of a win, your investments need a clear game plan.
To build wealth successfully through investing, you should look at crafting a road map that aligns with your long-term goals and risk appetite. This can be done in conjunction with a financial adviser or by doing careful research and using the wealth of information available online to help you build the right plan.
The selector: Diversity is key
The Springboks for the 2023 World Cup are a medley of players who each bring something special to the squad – the fast, the strong, the accurate, the leaders.
Similarly, diversification in investing is a key play. By spreading your investments across various sectors and asset classes, such as local and global equities, bonds and cash, you create a cushion against market fluctuations. This approach reduces the impact of a single loss and could amp up your overall portfolio performance.
The tactician: The right tools
The Springboks constantly come up with new configurations for their bench. At the last World Cup, they ditched the traditional five-three split between forwards and backs for six-two. Now they’re experimenting with seven-one splits. Just as these tactics keep up the Boks’ forward momentum, low-cost index funds do the same for investments. They trim down fees that could otherwise eat into returns over time.
The whole 15: Risk and safety balance
Notice how the Boks choose the right moments to take risks on the field? Like a rugby team balancing defence and attack, a well-rounded investment portfolio combines high- and low-risk investments. Index funds, like dependable teammates, replicate established market trends.
The captain: Weathering storms
The Springboks showed resilience after losing their first game of the 2019 tournament – a tough lesson, but they bounced back. Similarly, when investment markets are turbulent, maintaining your strategy matters. Resisting the urge to make impulsive changes during market downturns ensures you don’t lock in any losses and you will still be in the market when it performs better again.
The analyst: Constant learning
Every rugby game, whether it ends in cheers or tears, holds a nugget of wisdom. It’s the same with investments. Each outcome, good or bad, can teach you valuable lessons.
As Nomoyi says, embracing rugby tactics could result in a winning streak for your investment game. DM
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.