7 Lessons the World Cup Offers on the Stock Market
I loved this WSJ article by Brett Arends, 7 Lessons the World Cup Offers on the Stock Market. I hadn't realized it, but the parallels between winning at each are uncanny:
Darling teams lose in upsets all the time - why are we so surprised when it happens? Similarly, no "gold-chip" stock is totally safe from a tumble.
Teams following the quick-goal strategy get trounced by teams like the Brazilians, who wait for just the right moment to act. I love how Arends likens Warren Buffett to soccer great Pele on this point: "Warren Buffett–possibly the Pele of investment–once called investing an efficient mechanism for transferring money from the active to the patient."
The critical role of defense and risk management. Every trader likes to score big - that's the sexy part of investing. The less exciting part is defense, or managing your risk exposure intelligently, so you can live to fight (and trade) another day.
- Globalism matters, in soccer and in investing or trading. Why trade only U.S. stocks when two-thirds of the world's trading activity happens outside of the U.S. sphere?
What other money-lessons can you glean from World Cup action? I'm trying to think of the investing-equivalent of faking a penalty - maybe holding onto a losing stock position forever? The takeaway there is pretty clear: stop your groaning, get up off the field, and get back into the game!
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