Lessons from Cycling with Laurium Capital

March 6, 2024
Press Office

The UCI World Tour calendar is in full swing for 2024 with some incredible races this month – Strade Bianche, Paris-Nice, Tirreno-Adriatico, Milan-Sanremo, Volta Ciclista a Catalunya to name a few.  Closer to home, one of the most popular South African races will see thousands of riders from all over the world, participate in the 46th edition of the Cape Town Cycle Tour on 10 March, which arguably must be one of the most beautiful routes in the world. Not only this, but the event raises a substantial amount for many diverse charities.

The highlight of the international racing calendar must be the race for the “maillot jaune” or yellow jersey, which kicks off on the 29th of June, when 22 teams will line up at the start for the most iconic races in the world, the Tour de France. The race starts in Florence, Italy this year and ends in Nice on the 21st of July, after 21 stages covering 3,492km with some 52,320 metres of overall elevation. This will be the first time since 1905 that the race has not finished in Paris, due to a clash with the Olympics.

What is the link between Laurium Capital and Cycling, you may ask?

Laurium Capital is a boutique fund manager, with over R50billion in assets and a team of 38 people, based in Johannesburg and Cape Town. Operating since 2008, it is one of the leading boutique investment houses in South Africa. The performance track records of our funds rank highly against our peers as well as against benchmarks like inflation and cash.

Within Laurium Capital, we have a few cycling enthusiasts, a hobby that we share with many of our clients. The Old Mutual Double Century is a regular event and highlight of our sporting calendar, that sees our Laurium team tackle the gruelling yet breathtakingly beautiful 202km route from Swellendam through the Klein Karoo and Breede River Valley back to Swellendam.

Investing and cycling are similar in many ways, and 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 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 amongst 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, which inspires 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 over all the 21 stages of the Tour France. This is no different to investments.

For more information head to lauriumcapital.com

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