FIFA World Cup Musings

The 2018 FIFA World Cup in Russia has just successfully concluded. Like most people, I was sceptical of the TV referee introduction. But it has been a success. At first, there were lots of stoppages for key decisions but once players realised they could not game the system, diving reduced dramatically and the game flowed more smoothly.

In my mind, shining a light on South Africa’s corruption issues will have a similar result. Corruption is very hard to eradicate, yet it is one of the biggest taxes on society. Dealing with corruption will be slow and painful at first but we need all players to realise that they cannot game the system if we are to get this country back on the path to success.

The tournament also reminded me of the famous 1990 Gary Lineker quote: “Football is a simple game. Twenty-two men chase a ball for 90 minutes and at the end, the Germans always win.” Lineker’s flippant comment is not too far from the truth. Before 2018, six countries shared 19 of all 20 wins with Germany, Brazil and Italy winning 13 or 65%. Germany has always made it through the group stages in past world cups.

Well, the Germans didn’t win this year, so what went wrong? Nothing – just long-term cycles playing out. Germany’s past performance suggested the team had a good chance but they can't win every time. The Germans have such a great track record because they are good at laying the ground work to win – mentally strong players with big match temperament. Brazil has a different strategy but always plays to its strengths.

Cycles are also part of the fabric of investments. While recent investment underperformance is not consistent with Foord’s long-term track record, it is not unprecedented. We have been here before and will be here again. That is the nature of investments. Share prices and cycles generally correct over five years but sometimes take longer. What is non-negotiable to our investment team is that we prepare like Germany and create the necessary conditions to facilitate long-term outperformance. But, sometimes the bounce of the ball just doesn’t go your way.

We do this by building a solid foundation of managing money as if it were our own, putting investors’ interests first, not losing capital and growing investor’s assets ahead of inflation over the long term. This philosophy is a guide but it only works if you employ passionate investment people and create a strong culture that allows flexibility yet holds people accountable as we do.

Like the Germans, this may not have been our year. But we are confident our team and portfolio positioning will outperform in the unfolding investment environment.

Nick Balkin, Portfolio Manager