Investing and cycling – a beautiful parallel

July 28, 2023
Kim Zietsman - Head: Business Development and Marketing, Laurium Capital

The race for the maillot jaune or yellow jersey kicked off on 1 July, with 22 teams lining up at the start for the most iconic and beautiful race in the world, the Tour de France.

The race started in Bilbao, Spain, this year and ends on the Champs-Elysees in Paris on the 23rd of July, after 21 stages of 3 404 km of gruelling riding. As a cycling enthusiast, and being fortunate enough to have been to the Tour de France a few years ago, I often think how investing and cycling are similar in many ways, and in fact how parallels can be drawn between cycling and the challenges we often face in life in general.

There will be ups and downs

The route, like the market, changes every year, and every stage is different. There are flat, hilly and mountainous stages, some are fast and furious, while others are slower.

Keep pedalling

The weather can be a game changer and cyclists, like investors, must deal with variability. Sometimes you have the wind at your back, making pedalling easier, while at other times you may face headwinds and what was easy is suddenly more difficult.Things change, and the pedalling often gets easier again. You must persevere and keep pedalling, regardless of what the weather throws at you.

Risk and uncertainty

The stakes are high in world tour cycling. Every stage is analysed in detail by the team directors, such as the gradients, road ‘furniture’ or known hazards, where the hair pin bends are, etc. Many of these risks are known and can
be managed to some extent. Uncertainty is riding on wet roads and not knowing if there is a slippery patch around the corner that requires a response that cannot be predicted or planned for beforehand.

In investments, risk management is key to protect your capital and asset managers need to be nimble and flexible to react to unforeseen events. Understanding risk and your appetite for risk is important in making sound investment decisions.

It’s all about the team

The performance of the team is the result of the collaboration among the riders and the broader supporting personnel. Each has a specific role to play and needs to come together as a single well- coordinated, honed machine. There is a team manager, directors of sport, coaches, doctors, therapists, soigneurs, mechanics, bus drivers and nutritionists. Within the cycling team, each team has a team leader or captain that generally is the team’s best rider, and domestiques that shield the captain. In an investment team, the people, process and philosophy are key to success. There are analysts, portfolio managers and traders, supported by a broader operational team that needs to work together to ensure the best outcomes for clients. An experienced team with smart individuals that have a solid track record are more likely to do better than their peers.

Then there are those softer elements that are as important to the success of any team, and that’s the values and culture, which often stems from the leaders of the organisation, that inspire the team to work hard and perform their best.

Consistency is the winner

In stage races, the teams focus on different goals. For example, some focus on the general classifications, while other teams try to win stages or one of the other classifications. Tour de France sees the very best cyclists in the world battle it out for the yellow, green, white and polka-dot jerseys, based on the general, points, mountains and young rider classifications. Smaller teams may simply try to get television coverage by having riders in the breakaway group. Ultimately, the man in the maillot jaune will be the most consistent rider overall the 21 stages of the Tour de France. This is no different to investments.

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