If you like tennis, it’s been a great year (and even if you don’t, I promise you don’t have to know anything about tennis for this piece to make sense).
A couple of lazy Sunday afternoons spent watching Roland Garros and Wimbledon helped me spot a few little similarities to the world of investing: nothing lasts forever, however impressive.
For more than two decades, men’s tennis was dominated by the ‘Big Four’ – Roger Federer, Rafa Nadal, Novak Djokovic and Andy Murray.
And when I say dominate, I mean it. This year’s men’s final was the first in which none of the Big Four featured since 2002! More than two decades in which each year took broadly the same shape; the same players making the running and winning the titles, while other challengers rose and then faded away.
And then suddenly, one day, the old guard can’t cut it any more. They’re still good – great – players but just aren’t operating at the same level as they used to.
The likes of Google, Apple and Amazon are lagging the wider market. They’re still unbelievable businesses, but is their golden age over?
In case you’ve missed my laboured analogy, I’m talking about the US mega-cap ‘tech’ companies.
Unassailable for so long. But so far this year, the likes of Google, Apple and Amazon are lagging the wider market. They’re still unbelievable businesses, but is their golden age over? And who’s coming next?
Two of the new guard are Carlos Alcaraz and Jannik Sinner, who contested the men’s finals at Roland Garros and Wimbledon this year.
Two completely different players. Sinner is repetition and consistency. Process. Alcaraz is unpredictability and flair. Intuition. Neither is ‘better’ than the other. It depends on the day. The surface. A slip at the wrong time. A broken racket at a key point. It’s all about the context.
There’s no ‘right’ way to do things, just a lot of different options for a lot of different situations
That makes for spectacular viewing – in any decent rivalry, the excitement comes from not knowing who will win.
And on investment questions such as value vs growth, quantitative vs qualitative, or active vs passive, it’s the same situation. There’s no ‘right’ way to do things, just a lot of different options for a lot of different situations. We tend to embrace all of them – support the sport, not the players.
Winners don’t worry about how other people are doing while the game is on. The Wimbledon ladies’ singles final this year was one of the most brutal sporting events I’ve witnessed. Iga Świątek wiped the floor with Amanda Anisimova: 6-0, 6-0. Anisimova won zero games. Horrible to watch.
Focus on the goal and don’t get distracted by whether someone else is acting differently
But on reflection, the most impressive thing about Świątek’s play wasn’t her technique (which was spectacular). It was the ability to keep going, keep following the game-plan, regardless of her opponent’s struggles. And she’s shown that in matches she’s lost, too.
Follow your plan, regardless of what your peers are doing. Focus on the goal, don’t get distracted by whether someone else is acting differently, or performing well, or imploding. It’s your strategy. No one else’s.
The final point (geddit?) isn’t about this year’s Wimbledon. But it is worth making.
Serena Williams won 23 major tennis tournaments. The most successful female player in the modern era. She won 84.6% of her professional singles matches.
Roger Federer won 20 major tennis tournaments. Widely considered the greatest male tennis player ever. He won 82% of his professional matches.
But they both only won about 55% of the points they ever played. Put another way, two of the best players in history ‘lost’ roughly half of the time.
Graham Bentley: Timing the market is a mug’s game
In investing, it’s similar. On any given day, equity markets are about as likely to be down as they are up.
Over the last 30 years, world equities have been up on 54% of days. But when you look over all 10-year periods in that time, global markets are up 91% of the time.
Judging an investment by its short-term performance is like judging a tennis player by the odd point you happened to watch. It’s what happens day-after-day, point-after-point, over the long term that really makes the difference.
Ben Kumar is head of equity strategy at 7IM
