Experienced Investor
Three investment lessons from Leicester City’s title win
Well, they did it. And if you, like me, felt a strange, momentary anti-climax given Leicester City Football Club didn’t need to kick a ball last week to win the English Premier League, you should be over it by now.
With superlatives coming thick and fast, we might conclude that this is one of the most striking moments in the history of British sport.
It is hard not to hear the echoes in the challenges of successful fund management and behavioural bias.
Perhaps more admirable than winning the Premier League while defeating those wealthier, stronger clubs, is the stark fact that in spite of the temptation to limit their play and consolidate their gains, Leicester City collectively defeated the behavioural bias of loss aversion.
It was the equivalent of avoiding the fund manager’s temptation to lock in gains too soon and become overly protective, or an advisory client’s counter-productive desire to avoid losses at all costs without understanding risk as manifested by volatility.
It raises the question of how they have done it and what might we learn, so here are three Schroders conclusions from Leicester City’s success:
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