A Safe Pair of Hands
2nd October 2020
Goalkeepers love penalties because it is their turn to shine even though the odds are always stacked against them, but that is the beauty of sport – its uncertainty, anything can happen on the day. They can be the hero. The trouble is that too few do, in fact, become that hero.
An analysis of 286 penalty shootouts found roughly 50% of keepers leaped left, 44% leaped right and only 6% stayed in the middle. Interestingly though, the study also showed that 39% of actual kicks were struck down the middle, with the rest broadly going right and left in equal proportion. So, if nearly 40% go down the middle, why do only 6% of goalkeepers recognise that by staying put, doing nothing, will produce the best results?
The answer is probably down to “Action Bias”, which is our tendency to act even when doing nothing is better. Goalies may be keen to act to avoid regret and the recriminations of teammates – imagine Jose Mourinho’s reaction when the penalty is scored if Hugo Lloris had done nothing but stand in the middle of the goal! Doing it consistently right in one game, over the course of a season, over a career is very difficult but when nearly 40% of penalties go down the middle the game plan must surely be “be brave and stick to your guns”.
I have been reminded of this research over the past few months when colleagues and clients have asked what IronBright is doing differently to deal with the seismic events that enthral us all and what changes we are making in the portfolios to deal with the impact of the pandemic … and the answer is “nothing”. But remember that doing nothing is not the same thing as not having a plan. We do nothing that is not in our plan.
We do not try and second guess the market because crystal ball gazing and tea leaf reading skills remain out of our reach. The lion’s share of your longer term returns come from holding your asset allocation, which we reset every six months through the May and November re-balances; this is a discipline that generally means we sell high and buy low throughout the year, every year.
It has been a terrible year for many reasons but the portfolios that we look after for you are holding up very well. The FTSE All Share remains down -19.70% year to date whereas the IronBright 50 P portfolio (which reflects most client assets) is down just -2.82%. Even the racier IronBright 70 P is only down -5.13%.
When the pressure is on, we do not chase markets. We do not jump right or left if our plan is to stay still. We have strict investment disciplines that we abide by when it comes to managing your money and it has worked for you over the years that you have been kind enough to entrust your money with us.
I hope that you all remain fit and healthy and on behalf of the entire team I would like to thank you for your continued support and good humour.