Politics, Sport and Financial Planning

At time of writing, a large part of the nation is focused on the European Football Championships. Perhaps this is a welcome distraction from the 24/7 news and commentary we are enduring in the lead-up to next week’s general election, which inevitably carries more noise than substance. Maybe there is greater satisfaction to be drawn from debating England’s characteristic under-performance in the face of the perennial expectation we should be a “shoe-in” for the trophy, than in pondering the subtle differences in policy between the main political parties. This may be a function of the election result hardly seeming in doubt at this point, with just the size of Labour’s “supermajority” in question. Perhaps there is a parallel between Sir Keir Starmer’s (don’t drop the) “Ming Vase” election strategy and England’s anxious and defensive start to the Euros, and both will ultimately bring about victory.

Sports fans can also look forward to other big events kicking off before we finally get to the election date. The coming weekend sees both Wimbledon fortnight and the 3 week cycling marathon that is the Tour de France get underway. So are there other parallels we can draw between sport and financial planning.

In both football and financial planning, it is very important to have clear goals and objectives, and a strategy for achieving them. When setbacks occur, an injury or unexpected defeat in football, or an investment portfolio drawdown, a good manager or adviser will review and make incremental adjustments to team (tactics and substitutions) or portfolio (asset and fund allocation), taking into account the opposition (or economic environment), with a view to maximising the probability of achieving those goals.

With tennis, it is reported that even the best players of all time won less than 55% of the points they played in their careers. We can think about this in portfolio construction terms where diversification of holdings is considered important to risk management. It is not necessary to be hitting winners all the time, but ensuring we have more winners than losers across our investment time horizon can bring the success we seek.

In cycling, we can look at Sir Dave Brailsford’s philosophy of marginal gains and the success this brought for British cyclists in the Olympics, and the Sky Team in the Tour de France. This is the principle of seeking an overall advantage from very small performance gains in all aspects of bike riding, be it training, diet or equipment. A different jersey material, or shape of a helmet, could be the difference that brings success. At Seabrook Clark, we look to apply similar principles in areas such as the cost of managing investment portfolios. Reducing costs where possible through appropriate platform selection, the use of passive strategies as core holdings where appropriate and beneficial, and accessing the cheapest share classes of funds, helps support longer term portfolio returns through the compounding effect.

Please note that our view on the general election is based on our understanding of the proposed policies and available information; we cannot be held responsible for any errors, and you should not act on the basis of the information in these articles, nor do they constitute investment advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise. Overseas investments are affected by currency movements and exchange rates. If you would like investment advice on your individual circumstances, please do not hesitate to get in touch via telephone at 01392 875500 or email at info@SeabrookClark.co.uk.

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