What investors can learn from football
If I told you that investors can learn a lot from the decisions a football player takes, would you believe me? Well, here is the proof. We’ve listed below 5 tips that can help a player out on the field as well as an investor about to make a decision.
1. Fear is never a good adviser
The fear of loss is deep within us – no matter whether we are talking about a loss on the playing field, on the capital market or any other area. The problem is that this can quite often lead to wrong decisions.
2. Never choose the “all or nothing” tactic
Oftentimes, when a football team is losing and time is running out, it places everything on one card, e.g. the star player to whom all passes are made. But what is true for football can be very damaging for investors. There is a saying: “he who places everything on one card, always loses in the long run”. Beware of your reactions when you feel you are starting to lose money and take into account the risk of a total loss when deciding what to do next.
3. Sometimes it`s better to wait instead of reacting
When facing a penalty kick, the goal keeper jumps often to one of the two sides of the goal. From a statistical point of view this is not the best strategy. We can also find this kind of forced moves in the investment market when investors are too active during uncertain times. This could become very expensive – sometimes the best strategy is to wait and observe!
4. Be careful of the herd instinct
Following the herd instinct is quite common in football in view of following always the same transfer system. Also investors can step into this trap by investing in the assets everyone is investing in – which is not always the best strategy to follow.
5. Don`t believe too much in trends
Even if a football player scores a goal 4 games in a row, there is no guarantee that he will score a goal during the next game. Investors could learn out of this; they should not assume that past or current market developments will be the same in the future.
In a few words:
Get over your fears, but also never say all or nothing. Sometimes it`s better to wait for the right moment and this is not always the second everyone is investing. Get familiar with trends, but don`t use them as your pure guidelines!
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A share is a unit of ownership delivered by a capital company. In most cases, it is a commercial company with a limited liability. Holding one of several shares – in other words, being a shareholder – means that you own a part of the company’s capital but you are not held personally liable for the company’s debts.