illio’s big love is obviously financial analytics. However, with three of our favourite employees, Mark Prior, Alex Post and James Sawyer, playing for the Hong Kong national team, rugby, it seems, comes in at a close second.
Unfortunately for me, my know-how on both topics is limited to say the least.
Yesterday, Hong Kong played Portugal in a qualifying match for the 2023 Rugby World Cup, and I thought it would be a great opportunity for me to “up my game” when it came to understanding a bit more about both.
Spanning our investment analytics and strategy teams, Mark, Alex and James do much of the behind the scenes work that goes into ensuring our system performs at the highest level. Similarly, they take that same high-performance culture into the world of rugby and what I’ve learnt is that rugby and investing have complementary traits:
Rugby teams consist of Forwards and Backs. Forwards play the important role of steadying the team, protecting the backs and being the strength needed during scrums. Backs are your more agile players, ready to run with the ball, kick into the posts during penalties or slide their way across the line for a try. Too much emphasis on forward play and your team won’t be very agile and conversely, restricting your backs means potentially forgoing high scoring opportunities.
Similarly, a balanced portfolio will mean having a mixture of bonds & stocks. Bonds are historically a lot more stable and are your rocks when markets are more volatile – think of them as your forwards. Meanwhile, stocks or shares act more like the backs, giving you the opportunity to run the ball and try for high scoring opportunities. Investing in stocks will always be riskier, but growth could outweigh your bond returns.
A rugby team needs to be diversified in skills. You want to make sure you have strong kickers, good runners, agile evaders and reliable props. Different players will come with different qualities, so selecting the right mix of talent is essential to assembling a strong team.
Similarly, when building an investment portfolio, diversification is key. Managing your investments across asset types and regions will help you manage your risk levels and expose you to different market factors. Some choices will be aggressive in the short term, while others may focus on building your long-term game.
In any team, you’ll have your star players, but they cannot play alone.
All teams will approach each game with a plan on how best to defeat the opposition. As with any good strategy, they also need to be willing to adapt based on how the game is panning out. Do you need to play more defensively, try to increase your offensive plays or are you going to stay the course?
A good investment strategy will also be planned but flexible to changing market conditions or your own goals. Go in with a plan, set everything up as best as you can but also, have a backup strategy ready. For example, make sure you have enough cash to dip into should you want to invest in something else without having to sell. Moreover, as time goes on, your own financial goals and risk tolerance can change, meaning your original plan may not be set up for your current state. Keep an eye on your overall portfolio based on the current situation you are in.
In the past, all you needed to play a game of professional rugby was a pair of shorts, a jersey and a mouth guard. However, as the game has become more competitive, the modern rugby player uses a lot more tools to gain an edge. Head gear and body armour are now used to protect players. Rugby boots differ based on whether the player is in the backs or forwards. And data and performance analytics is used with increasingly more complexity in the elite side of the game.
In much the same way, the modern investor now needs more tools to help them study their investments and analyze their portfolio in the context of their current goals and risk tolerance. With illio, we go beyond just equipping you with professional grade tools. We also deliver Insights which help explain the key facts of your portfolio.
As for the match?
It started brilliantly, with Alex Post scoring the first try. However, despite fighting bravely, they succumbed to the brilliant back play of the Portugal team. Next up is the mighty USA!
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