It’s all eyes on Paris as a careful selection of each country’s top athletes seek to prove their mettle on the world stage.
There’s something to be said for the size of the pool when it comes to medal tallies. The United States named 592 athletes for their Olympic squad this year. New Zealand, by comparison, named 195. They’ve won 2,959 medals over their tenure, and we’ve won 143.[i]
Global stock markets have a similar flavour to their distribution. The US takes up 61% of world equity markets, while little old NZ takes up just 0.1%.[ii] A smaller representation does not mean our markets (and our athletes) will not perform well on the world stage. New Zealand’s 2009 – 2019 bull run proved that.
However, performance really can’t be predicted by what’s happened in the past. We know this in sport as in finance; just when you think a team or athlete has it in the bag, something comes out of left field and renders all predictions useless.
Take Simone Biles for example. After a career that has earned her a reputation for being unimaginably good at her sport with a total of 37 Olympic and World Championship medals, she is the most decorated gymnast in history – she ended up withdrawing from the Tokyo Games 2020 after an uncharacteristically poor event, citing mental health reasons and sparking a larger conversation around the pressure athletes are under. No one could have picked that outcome at the time… and few would have picked that she would be competing once more at Paris 2024.
Upsets and last-minute underdog wins are part of the glory of the Games. If your picks lose, there is still some satisfaction in sportsmanship and a ‘good win’ – even if it’s by someone else.
But unlike the thrill of getting behind your nation and your favourite athletes in the Olympic Games, there is little joy to be found if you lose out by not thinking globally as an investor.
While the Games undoubtedly influence local economies, they have less impact on global equities than you might expect. The US topped the Olympic Medal Table for three out of five Olympics prior (from 2004 – 2020) but did not top the annual returns during any one of those years.
During the same period, New Zealand wasn’t even in the top 10 for the tally once. We did make it to the top 10 twice for % annual returns though.[iii]
It’s great fun trying to call who will come out on top in an Olympic sport. You can look at athlete stats and weigh them up against the competition. When it comes to markets, you don’t need to predict who will come out on top – and honestly? You shouldn’t try. That way leads to madness (and often, significant losses).
Another example of unpredicted events… this year’s Games has already had a bizarre incident involving drones at the training grounds of the New Zealand women’s soccer team. Operated by Canadian staff members, the drone spying has led to their coach stepping aside for the opener.
With the Football Ferns ranked 28th in the world and Canada as the reigning gold medallists, such disruptions remind us that in both sports and finance, nothing is certain. A readiness to adapt to unforeseen challenges is key to success.
Instead of putting all your eggs in one basket, you should be diversifying across the board. Think of it like this: Instead of betting that one team or athlete will win all the medals in the events they participate in, you’re betting several times that medals will be won by someone, in one of many varied events, from a wide pool of nations. It’s a safer bet if you’re not relying on the performance of the few.
On top of that, you don’t have the same time imperative. Winning doesn’t need to happen right now at this one big tournament for it to count. With the fullness of time, you can enjoy (and benefit from) the wins as they come – and be less gutted when someone in your team doesn’t bring home gold.
Winning in financial planning isn’t about getting gold or being the best of the best. It’s about the long game.
If you want to get the blood pumping and experience epic highs and lows, watch the Olympic Games. If you want to create long-term financial success via sustainable, evidence-backed strategies, book a chat with your trusted local financial adviser.
by Nick Stewart (CEO and Financial Adviser at Stewart Group)
· Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay-based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Article no. 366.
· The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
[i] https://www.visualcapitalist.com/which-countries-have-the-most-olympic-medals-of-all-time/#google_vignette
https://www.olympedia.org/countries/NZL
[ii] Dimensional Quick Take: “Global Diversification Can Make a World of Difference”, DFA Australia Ltd 2023
[iii] Short n Sweet: “The Investing Olympics”, Warwick Schneller, DFA Australia Ltd, 2024
