The Rugby World Cup Final is being played overnight and either South Africa or New Zealand will create history by winning it for the fourth time. Ireland and France are two great teams who have fallen short, by the smallest margins. In fact, there is no difference between these four teams.
South Africa and New Zealand are rugby nations. It’s no coincidence that between them, they have now (including 2023) won it 70% of the times it has been played. They live and breathe the game – South Africa, only amongst a certain group of the population but New Zealand, the whole population. It’s part of the culture and they think about the game deeply.
New Zealand created innovations about a decade ago, when they made the game a lot quicker using rapid passing and offloading in the tackle a common occurrence. More recently, South Africa has innovated. It’s a lot easier to experiment from a solid base of principles and processes.
With the current uncertainty in the world, both geo-political and markets, the range of investment outcomes amongst investors is going to widen. Human investors are highly susceptible to costly errors, especially under pressure.
Good and Bad Investors
Good investors have seen it all before, don’t panic and in many cases, are bold when others are scared. They understand how it all works, they trust the capitalist system will deliver returns as long as they are patient and they learn along the way.
What bad investors do
Bad investors look back not forward and expect market corrections to have been easily predicted. Bad investors have no understanding of the impossibility of timing markets, transaction costs and the difficulty of getting back into the market after a major correction. They think they will be bold after prices have fallen even though they panicked before prices fell.
Worst of all, bad investors don’t have much interest or patience to improve their knowledge and understanding.
Successful investing is a culture and needs a process
As Warren Buffett said, “To be a successful investor over a lifetime, you don’t need a stratospheric IQ or unusual business insights. What you need is a sound framework for making decisions and the ability to prevent your emotions from corroding that framework.”
First, decide to become a successful investor – believe you can. Then create a policy with rules for how you do things. Trust capitalism but accept volatility. You won’t win all the time and it’s what you do when it feels like a loss that counts more. If you panic, change the system too much, or blame someone else, you’re doomed. You’ll notice that the best teams never blame. It’s always a team effort so make your selection based on people who are technically competent, know what’s important to you, are on the same page with no ulterior motives and do what they say they’ll do.
Ireland and France went back to the drawing board almost a decade ago. They started at grassroots level and created the processes to be permanently successful. It has taken them a long time to become the best in the world and although they were knocked out in the quarter finals, they will remain as good as the best for a while to come.
One other thing – great teams and great victories only ever come after the processes have been tested under extreme pressure and apparently ‘failed’. No teams ever win big titles without having a number of losses first. Big losses, then small losses, then losses that should have been wins…then titles.
To be successful financially over a long time, be prepared for knock-backs along the way. Goals are for people who want to win once; systems and processes are for people who want to win repeatedly.