What’s the most important thing to be successful in this market?

I have a great dislike for “international duties” when it comes to football.

Being Australian in the UK when there’s some sort of qualifying on for national teams for what appears to be another contrived FIFA tournament it just means there are no Premier League games.

When football, Premier League football, was back this weekend I was quite happy about it. Albeit I had to wait all weekend to catch the Wolves play in the last fixture on the Monday Night Football (MNF) games.

Annoyingly, it all finished in a 1-1 draw. Better than a loss I guess. However, it wasn’t until after the game that I got a little nostalgic, and sad.

The MNF guys were running some analysis over the weekend’s games. They showed some previous clips of football games from a couple of seasons back. It was then that it really struck home how much I miss crowds in sport.

Weirdly, it also reminded me of one of the most powerful and crucial weapons I believe you as an investor, and generally as a person, should have in your arsenal.

Time heals all wounds

This morning over coffee my wife asked me, “How was Wolves’ game last night?”

I explained the result but made note to her how much I missed going to the football. Or just going to any sports event.

I remember when a mate of mine came over from Australia a couple years ago. We managed to get to a Premier League game in the winter. It was freezing cold, packed into the stadium like sardines, even snow on the pitch before, after and during the game.

It was incredible. The crowd the atmosphere, the excitement that it brings to not just a game, but to people all across the UK. I’ve said it before and I’ll say it again, it’s hard to comprehend how important football is to the British national identity.

Sure, not everyone likes football. Not everyone plays it. Not everyone goes to it. But overwhelmingly it’s a crucial aspect of many people’s lives and the national economy. Some cities can rise and fall based on the success of the football team.

It’s a weird phenomenon, but it’s just how the fabric of many communities across the UK are tied together.

That’s why these lockdowns and the banning of fans from games (and the brief cancellation of games earlier this year) have been so devastating. There’s also clearly an impact on the game itself from not having crowds being able to attend a game.

With all these restrictions dragging on, it’s made this year feel longer than it should. However, the light is there at the end of the tunnel.

The government has said it’s open now to letting restricted numbers of crowds into games after this lockdown ends next week.

By no means does it go far enough. It should let teams allow all fans back to games. It should let people be able to get on with life again. We’re not there yet, but this is a start.

As it’s a start, we can then see that soon enough, with a little patience, we will get back to normal. But even if it’s a gradual thing, the expectation and realisation is that things will get back to the way they were.

Knowing that soon enough I’ll be able to go sit in a freezing cold stand with tens of thousands of other people is reassuring. I’ve just got to be a little patient.

The exact same thing is applicable when it comes to your investments.

There is a pathway back. All you need is a little patience.

Take for example an article I was reading yesterday explaining that UK economic output might not return to pre-crisis levels until the end of 2022!

According to analysis from PwC,

UK economic output may return to pre-crisis levels by the third quarter of 2022, with the caveat that recovery could take until the end of 2023 if there are prolonged lockdown measures.

If you’re looking at that with an element of despair. Don’t.

That’s perfectly fine with me. I expect that things will actually bounce a lot harder and faster next year. But if it takes until the end of 2022 or even 2023, that’s ok.

The point is it will recover. There is a pathway back.

With that in mind, there’s only one thing you need to manage in between now and that period it takes to get back to pre-crisis levels, patience.

That’s the best investing weapon you have right now.


Primed for profits

Armed with patience, and of course the right strategy and mix of stocks, I think the next few years could be hugely profitable for British investors.

There’s a little more complexity to it than just patience of course. You also need to ensure you’re invested in stocks that have that bounce-back potential. Stocks that can ensure they’ve got appropriate measures in place to ensure ongoing operation until that point in time.

The good news is there’s loads of companies like that on the UK markets. What I think you’ll start to see more of and more of in the mainstream papers and business sections is this idea of a transition “back to value”.

What they mean by that is that investors are starting to wake up to the fact of the incredible companies listed on the UK market at depressed levels that present value to investors based on their financials and fundamentals.

These “value” stocks had more recently given way to “growth” investing. Stocks that don’t necessarily have a financial foundation, but have the potential to deliver growth with future revenues down the track.

Now, there are “value” companies that have huge “growth” potential – but only because they’re at levels that makes them behave like a “growth” stock yet are at their fundamental core, value.

It’s a weird little nuance of financial terms the difference between growth and value. To me, personally I think any stock that’s got the potential to deliver in excess of triple-figure gains to investors is a stock worth chasing down, regardless if they’re “value” or “growth”.

Nonetheless, there’s a recovery underway from the market events of 2020. There are companies on the UK market trading at values that I consider to be a huge discount to their “true” value.

With a little patience, the right mix of stocks and a suitable plan of attack, I believe the UK market is primed for profits.


Sam Volkering
Editor, Exponential Investor

PS Like I say, the UK market.is primed for profit. Sure, I think the best weapon you need to capitalise the most is patience, but there’s also a way to capitalise on this market in a faster and more quick-fire way. It’s called the “Power Hour” and if you know when to use it and how to use it, it could transform your portfolio.

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