This week, Black Swan Capital Europe is proudly announcing our sponsorship of community-driven local rugby team Rugby Club, The Smugglers Velserbroek, in North Holland.
We are big fans of rugby for the fitness benefits, camaraderie and excitement that comes with watching and playing the ‘game for thugs, played by gentlemen.’ We are delighted to be associated with a grassroots club near our head office in The Netherlands that promotes this sport for all ages, genders and backgrounds, bringing together locals and expats for the shared love of ‘egg-chasing.’
This new association had us thinking. What sort of lessons (however tenuous the association) could we, as investors, draw from the game of rugby. Was there perhaps some way we could stretch the metaphor into an article for our blog? Well, I’m here to give it a try.*
(*That won’t be the last dreadful pun)
Let’s kick off with the team aspect of investing. As with many sports, the individuals on a team have particular skills, qualities and responsibilities that are distinct to their function within the team. Financial planning is no different. A lawyer, accountant and financial advisor might have quite separate roles and qualifications but need to work alongside one another and understand each other’s work in order to achieve the desired outcome. Each member of the team has a role to play in success or failure. Without one, the team can still function, but might be at a disadvantage in the long run.
Watch the clock
Every investor should be playing to the whistle. There are strict time constraints to every financial goal that will determine how much risk you can take and what sort of strategy is sensible to employ. If a rugby team needs 2 tries with 5 minutes to go, there might be an all-or nothing rush to secure the win, but if this is only the first game of the season, the risk of losing players to injury could outweigh the desire to run up those few points. Having a clear concept of success in the bigger picture is key to formulating an investment strategy and chasing the big win in the short-term could prove damaging overall.
Play by the rules
As with sport, financial services is governed by a set of rules that are designed to protect the individual and ensure consistency. Some people will always try to bend the rules or outright flout them, but that can lead to strict penalties, and will not be in the best interests of all participants. Understanding the rules and regulations that govern your own conduct and situation is a condition of participation.
Push through tough times
Things won’t always go your way. Sometimes, as an investor, it can feel like you’re kicking into the wind, but headwinds can change, and even if they don’t, you can look forward to halftime and having the wind behind you as you recover. Markets will always ebb and flow so be prepared to keep working towards your objective when the run of play is against you. One peculiarity of rugby is that the ball can only be passed backwards. This means that to move forward, you may need to give some ground so that you and your team can get closer to the goal.
You can’t judge the bounce
I’ll wrap up with my favourite rugby/finance metaphor: The ball.
A rugby ball is an odd shape. Less like a traditional ball and more like a huge, inflatable baked bean, this evasive creature has unpredictable tendencies. As we have seen in recent months, when markets are up in the air, it can be very difficult to predict what comes next. A rugby ball kicked loosely upwards will not fly straight and, when it does return to earth, could ricochet off in any direction. The one absolute constant is that if the ball is going up, it will come down. If it is falling, it will bounce back up. Trying to judge the bounce or trajectory of an investment market can be difficult, bordering on impossible, but understanding that it will have its ups and downs is necessary for any financial plan.
The solution to the unpredictability of a rugby ball is to keep the ball in hand, maintain control and stay in touch with it as much as possible. If you don’t have your hands on the ball, then be sure that someone on your team is in control and you know what they are doing to achieve your common goal. The less left to chance, the better. With your investments, you want the strongest team possible around you, with a clear understanding of the rules and the gameplan within the timescale, working together, communicating constantly and managing the variables.
We at Black Swan Capital Europe are proud to be on your team and driving forwards with you, just as we’re proud to support RC The Smugglers here in Holland.