Rudi's View | Jul 09 2010
By Rudi Filapek-Vandyck
After I finished writing my Rudi's View story on share market diamonds on Wednesday I went out for a few drinks. Before I knew it I became part of a pub table discussion about which game of “football” is the most attractive to watch.
Being in an Australian pub, it was little surprise the discussion soon centred around whether Rugby League should not be considered the end all and be all for TV audiences. Taking a more macro-view, however, it is difficult to not concede there is at this point in time only one genuine “world game” and that is the only form of “football” that is actually played with feet instead of hands (no matter how hard people in Australia try to label it “soccer”).
I guess I have now given away the fact that I was born and raised in Europe, the original heartland of “football”. And yes, I have been watching hours of at times thrilling dribbles, timely tackles and hapless referees.
I probably enjoyed it all the more because Belgium, the country I come from, had to stay at home this time (courtesy of Spain), allowing me to watch and observe with no mental attachment or ties. Below are some of the observations I have made over the past weeks, observations I think equally apply to global financial markets:
Firstly, every viewer, every commentator, indeed every “expert” around the wold has his or her own favourites and preferences. This, at times, makes for beautiful, spirited and biased television and media coverage, but it also creates a lot of noise. I have heard first hand about punters putting in a bet because of expert comments and “analyses”.
Many of these punters forgot to take into account that commentators in Australia are very much Anglo-biased. This is why, even when Justine Henin was ruling the world of women's tennis, Serena Williams remained the unchallenged poster girl for the Australian Open, to name but one example. Another predictable outcome is that England is always included as one of the favourites for the Football World Cup.
Don't fall into this trap. England once won the World Cup, 44 years ago, on home soil and after a blatant referee error awarded them a goal that wasn't in the deciding final of the tournament (against Germany, of all irony). They have never genuinely looked like repeating the experience if only for once since.
While the home crowd, and media, will be cursing the blatant referee error in the game against Germany for many years to come, it doesn't take away that Germany was simply better on all fronts, and not just by a small margin. South Africa 2010 is a repeat of all tournaments since 1966: England enters with the self-belief they should win the Cup, but in practice they stumble and bumble past lower ranked opponents until a genuine contender sends them home.
Next time better? Ah well… At least the betting agencies are always having a good time.
There's a clear message for investors in this: no matter how biased the commentators, or how hard some may try to sell their idea, ultimately it all comes down to whether there is enough quality behind the noise.
What goes for England, also goes for France, for Italy, for Switzerland (lucky win against Spain) and indeed for the whole African continent (heavily supported by Fifa and the home crowd). If the quality is not present, the illusion can only last for so long.
High tides will eventually be followed up with low tides and then it will be revealed who is wearing swimming trousers and who isn't. What goes for the World Cup Football equally applies to investment opportunities: quality will rise to the surface if and when put to the test.
Unfortunately, quality in itself is sometimes not enough. Management errors can prevent that quality from reaching full potential. It was beautiful to watch, from an impartial point of view, but the Australian demise against Germany proved too much to overcome in the following two games. Missed opportunities are -alas- part of the World Cup experience.
What I found quite surprising was that, after the first round, commentators turned into parrots who all agreed that Europe had badly failed and the pendulum had swung decisively in favour of Latin American teams. About a million reasons were cited why that had been the case.
Up to the point where I actually sat down, looked at the teams that had qualified for the second round and asked myself: am I missing something others can see and I don't? The answer, as we all know by now, is: of course not! Most commentators were simply drawing conclusions too early on the basis of face value appearances. Before you know it, everybody is saying the same thing over and over again, but that still doesn't mean it is actually true and correct.
If Ghana hadn't missed that unmissable penalty, the top four of this year's tournament would have consisted of arguably the three best teams in Europe, plus Ghana, and not one single team from Latin America. How's that for some noise on the sidelines?
Investors: take note. There is a clear message in this.
Lastly, one simply has to admire the luck of the Dutch in this tournament. Even Dutch commentators are now acknowledging Dame Fortuna has probably been hiding in a coffeeshop somewhere in Amsterdam's red light district throughout this World Cup contest.
“Boring but effective” has now carried the Dutch for the third time in World Cup history whole the way to a spot in the tournament's finale. Will it be Third Time Lucky against what is arguably the best team on the planet; Spain?
Based on history, the Dutch deserve this year's title more than anyone else. The team hasn't been beaten for two years or so (not one single time). Add the fact that the two previous finales were both played against the home team; first Germany in Germany, in 1974, then Argentina against Argentina, in 1978.
Just an an interesting side-remark: the Dutch team of 1978 only qualified for the World Cup after a draw against Belgium, which was wrongly denied a goal in the deciding game. Australia, don't think you're the only one who has some complaints about referee errors – some Belgians are still mesmerising about what could have been had the Belgian national team gone to Argentina that year.
Arguably, the Dutch, with semi-god Johan Cruijff in the team, should have won the World Cup at least once in the seventies. I recall Rob Rensenbrink's certain goal was blocked by the goal post in the dying minutes of regular time in that finale against Argentina in 1978. Ultimately, the tournament hosts won 3-1 after extra-time.
Oddly enough this should raise hopes for the Dutch this time around. History shows it is not always the best team that wins the Cup, and Spain are the red-hot favourites this year.
Spain is showing the way the game will be played by the next generation of football stars. It would be good if the best team also becomes World Champion, but the same could have been said about other teams in the past (see also the Dutch in 1978).
If Spain does win, however, the World Cup will deliver a welcome boost to the morale of Spanish consumers. Not that The Netherlands have moved to Asia, but Spain could definitely use some good news.
Most experts are on the side of Spain. Investors in the share market know this doesn't mean much. If the expert majority had been correct late last year, the Australian share market would now be above 5000, the US dollar would have been thrashed and gold was staring at US$1500/oz, if not more.
Look where we are now.
For the next World Cup, in four years in Brazil, I predict a come-back for Latin American countries and a strong performance of a young Belgian team. Admittedly, a lot can (and will) happen between now and then.
Enjoy the finale on Sunday. I will be watching too.
Erm, that'll be Monday morning.
