Callisto Wealth Management Ltd
Rainford Hall
Crank Road
St Helens
WA11 7RP

Leicester City and the wisdom of process over outcomes

Who would have thought it last August? Leicester City, 5,000/1 outsiders lift the Premier League trophy. It may be a ‘cinderella story,’  but I believe that they won the league title because the manager – Claudio Ranieri focused on process instead of outcomes.

He realised that his team had some key strengths. They have a strong, experienced defence, terrier-like midfielders that were on to mistakes like a flash, and a very fast forward in Jamie Vardy, who took most of his chances. Ranieri formulated a plan and built on this with good camaraderie and team work.

They had some of the lowest possession statistics in the league, but teams found it difficult to score against them, and then they would hit them on the break with fast skilful players up front.

The diagram below is from the book Winning Decisions, succinctly sums up the strength in focussing on process:

Good Outcome

Bad Outcome

Good Process

Deserved Success

Bad Break

Bad Process

Dumb Luck

Poetic Justice


Ranieri paid attention to process had a good outcome and therefore deserved success. Louis Van Gaal at Manchester United had a bad process (even the players didn’t buy into his philosophy) a bad outcome (they didn’t qualify for the Champions League) which culminated in poetic justice (he lost his job).

There are many comparisons that can be drawn between sports and investing. Investing is both uncertain and complex, like football.  Ad-hoc investment decision making, without a suitable framework, introduces inappropriate risks in the portfolio and emotional pressures to make knee-jerk decisions in response to market events.  A disciplined and well thought out process reduces these risks.

Many advisers convince their clients that outcomes are the answer in investing. They build portfolios based on the latest trends and fads, they sell past performance to their clients and believe that the managers they select have the Midas touch. We regularly come across portfolios that have no proper structure to them and are full of investments that seemed like a good idea at the time.

At Callisto like Claudio Ranieri and Leicester City, we too focus our efforts on process over outcomes. We put our portfolios together based on tried and tested principles of wide diversification, keeping costs under control, managing risk and emotions and focusing on portfolio structure. We select assets that complement each other and each component of our portfolios has a job to do and is in there for a reason.

Crucially, Ranieri never panicked when things inevitably went against them during the campaign, the team just kept sticking to his plan and by the time the favourites for the title had woken up to the challenge, they had too many points to be pegged back. Likewise, when markets go through difficult periods, we remind our clients of the principles behind their portfolios and the wisdom of sticking with the plan over the long term.

Why not pop in for a coffee and a chat about your plans and your investments. We’ll review your portfolio with you and give you a second opinion. If we think it is well-suited to your long-term goals, we’ll happily tell you so. But if we think it isn’t working as well as it should, we’ll explain why. Give us an hour and we’ll show you how to get the best out of your life and your money.

Please feel free to get in touch - or phone 01744 881 421 We would love to hear from you
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