Recently I was asked by a journalist for my tip for a surprise package at this year’s finals. My response is below…
Why choose a team where only good things are expected? If Brazil, Spain or Argentina wins, it would be expected, you’d be paying up for quality and valuations on such teams would already be stretched.
Those championing the potential of dark horses, such as Belgium, Uruguay and Chile, are also going with the experts, so again this would be reflected in the price; these would be your high growth stocks – any earnings disappointment would see a painful de-rating.
What about the “deep value” contrarian plays, such as England or the clowns across the channel? The former are useless and deeply uninspiring, with a very suspect defence. Moreover their star players/ management do not deserve to be given the benefit of the doubt (I am missing my first World Cup this millennium, focussing instead of this pre-WC trip to Miami).
What about our beloved neighbours, les Bleus? France will have almost certainly started fighting before the plane takes off from Charles de Gaulle airport. They should get out of their tame group with ease, but could follow up on their lunacy in South Africa with another shambolic effort. They’ll be knocked out early, me thinks. Therefore, despite optically cheap valuations and low expectations, France is a value trap.
I’m far more in favour of picking teams where little is expected and the potential for surprise is high. Both Japan and Bosnia are under-rated and have groups from which they can qualify. But my outside bet and tip for the semi-finals is the US.
Mostly ignored, the team plays well as a unit and have players now used to playing on the international stage. They are used to playing in the Central American heat and will be in their own time zone. Little is expected, because they are in a tough group; but if they can escape from the Group of Death it will give them huge confidence. They could win their first game versus Ghana and lead the group and then have the potential to take points in their second game against Portugal, who are over-rated because of a young Mr Ronaldo.
Perception of the US is poor, their abilities are underestimated and they are rank outsiders; it is my sort of investment.
So there it is. Contrary to our investment portfolios, where we are structurally underweight the US, they are my pick to surprise all at the World Cup. I can’t see past Brazil or Argentina winning the trophy.
Tom Becket is CIO at Psigma Investment Management
