Similarities and Differences between Stock Trading and Football Betting

Analysing Investments

In the stock market there is a rule of thumb: Buy shares when the stock chart heads in a direction from bottom left to top right, and don’t burn your fingers when the curve is falling from top left to bottom right.

Whether to buy stock or invest in a fund, an investor usually always employs some sort of technical analysis, in other words, charts, graphs, historical financial statements, profit/losses from recent years, growth forecasts, annual management reports, etc. Indeed, anything that can somehow be expressed in numbers.

Image: wrangler (Shutterstock)

It is probably realistic to assume that the majority of shareholders have never heard the names or know the functions of the individual board members of the companies in which they hold shares.

Investors are not in the least bit interested whether any of these major players is in good or bad health or whether they are enjoying a particularly high level of personal wealth.

No-one cares whether board member ‘A’ lit the fuse and proposed a significant change in the group first, or whether it was actually board member ‘B’, or even the insignificant and always overlooked employee, ‘C’.

The only things of any interest to investors are:

• What effect will particular business decisions have on the future price of the stock?
• Is the share correctly valued?
• Will my portfolio of stocks and shares remain stable?
• Is the share price increasing or dropping?
• When and how much dividend will I be paid?

How many share investors have ever given a thought to the thousands of employees within an organisation, or the state of individual contracts within the businesses they hold stocks from, or the growth and marketing plans, internal documents and policies, accounting procedures, department structures, intrigues and insider plots?

The list of variables is endless!

Businesses traded on the stock market usually have thousands of employees and business partners all around the world; affairs could go wrong a million times, but investors don’t pay much attention to these angles.

In any case, hopefully companies keep their strife, intrigues and internal affairs to themselves and at the end of the day, only the bottom line matters for them and their shareholders, and nothing more.

Large corporations are merely ‘business vehicles’, just the same as football clubs.

Corporate Businesses vs. Football Businesses

I am sorry to all you football fans out there but let’s face it, from Nokia you buy mobile ‘phones, from Manchester United, you get football.

The only difference being that many footballers have a higher salary than a Nokia board member, which is simply due to the fact that a football club business has a relatively high turnover compared to its number of core staff.

As Nokia will not change its business direction overnight, so Manchester United will certainly not become a different team to the one they were last week.

Nokia has been building mobile communications equipment for years and one can probably expect that this will be the same in a year’s time, whilst United have been winning title after title and are the most successful club in English domestic football history.

Nokia builds ‘phones regardless of who is their Chief Executive Officer, and United continue to win matches whether or not Robin van Persie, Wayne Rooney, or David de Gea play.

The most important thing in common is that both organisations have a winning formula/mentality in their respective business sectors.

But when it comes to buying-in to a corporate business or a football club as an investor or fan, in the stock market, technical analysis forms the basis for purchasing decisions.

The brain of a football supporter, however, refuses even to accept an analysis!