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From Russia with love

Richard Rauch

First Sentier Investors

One of the more curious things about World Cup fever infecting the planet is the sudden authority by which previous novices now espouse their views and share colourful commentary on a sport that hasn’t been of interest for the prior three years and 48 weeks. For four sweet weeks every four years, we capture the zeitgeist* of the moment and in the case of Germany being knocked out early this World Cup, schadenfreude**. But as I reflect on the past few weeks, dear reader, I also see some parallels to financial market wisdom being spouted during moments of buoyancy. The number of financial “experts” and “thought leaders” has multiplied recently, and it’s possible that some of them don’t know what they are talking about.

For example, young people are being enticed to build their future nest egg by “investing in where the world is going” (not where it’s been). Just buy the FANGs (Facebook, Amazon, Netflix, Google) or is it FATS, or FAAMG, or FAANGs? More like FOMO (fear of missing out) if you’ve seen the valuations of these stocks recently. I can’t say if they are “cheap” or “expensive” but I do suspect that expectations of future success is baked into the price. That’s more-or-less how equity pricing works, but nonetheless share market tips just keep coming from the young kids. At least they are trying to make the world a better place. If Gordon Gekko~ was a millennial, then he might say, “Blue Horseshoe would like Anacott Steel very much, if only management focused more on Environmental, Social and Governance issues.” Apparently 20-somethings have even figured out a way to disrupt the World Cup – 58% of under 30’s admit to illegally streaming games.

The other day a taxi driver spent half of my journey telling me why VAR (video assistant referee) is ruining the World Cup and destroys the “purity of the game”. He then spent the other half of the time explaining how an inverted yield curve is a sure-fire predictor of a recession. You have to admire the breadth of topics a cabbie can cover in a short span of time!

My brother in-law tipped Uruguay to go all the way this World Cup, if only they can keep their “midfielders well-organised” and then told me that Tesla will quadruple in value if only they can “control their cash burn”. You can’t make this stuff up.

My uncle loves the talent on display by the French, but is also concerned that low unemployment isn’t feeding through to higher wages. The Phillips Curve has got nothing on Benjamin Pavard’s curving strike during France’s thrilling victory over Argentina. This is getting silly.

Hand of God or not, apparently Maradona has let himself go in recent years…but so has the price of a cup of coffee in Venezuela. According to the “lady in the lift”, hyperinflation may spread to the developed world given all the central bank printing and something about chickens coming home to roost (whatever that means).

Even YouTube’s algorithm has gotten in on the act – suggesting I next watch “10 times Lionel Messi OWNED Cristiano Ronaldo” followed by “7 times Pelé went BEAST MODE”. Of course this was followed by a video titled, “How I made $830 profit in 45 mins trading credit default swaps”.

Not to put too fine a point on it, but these are red flags, people!

Or shall I say red cards? Anyway, apart from these ramblings there are some universal truths here to consider:

  • The “Lucky Country” was decidedly “Unlucky” lamented Australia’s coach, Bert van Marwijk, after crashing out in the knockout round; sometimes you need a bit of luck (in football and investing)
  • Markets go up, markets go down; interest rates fluctuate; don’t buy risk at the wrong price
  • Neymar is a world-class player and an even better flopper (#NeymarRolling)
  • Asset allocation is still the most important decision you will make (and believe me this is an active call)
  • England will likely get knocked out on penalties
  • Finally, don’t listen to the “experts” (especially me) and use sophisticated data analytics and quant tools to cut through the increasing amount of “noise” out there, especially as this cycle extends. 

Trust me, all this free advice will help you keep your wits about you over the next four years, by which time we’ll once again be pontificating the virtues of ball control/possession vs. direct style (i.e. long passes and through balls) and reminiscing about the last big market correction that we should have seen coming.


For further insights from the team at CFSGAM, please visit our website


* the defining spirit or mood of a particular period of history as shown by the ideas and beliefs of the time

** pleasure derived by someone from another person's misfortune

~ a character from the movie Wall Street

Richard Rauch
Investment Director
First Sentier Investors

Richard provides the technical link between investment, sales and marketing functions for Colonial First State Global Asset Management’s multi-asset and fixed income capabilities.

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