Tuesday, July 13, 2010

Six Investment Tips to Take Away From World Cup: Matthew Lynn

Commentary by Matthew Lynn(Bloomberg)
Some people might think the hours you spent over the last month sitting around, drinking beer and watching the soccer World Cup being played in South Africa was a waste of valuable time.
Of course, they are wrong. Between cries of “no way was that offside!” in front of the television, some of us have been carefully constructing an investment portfolio that will make us a fortune in the next year.
After all, there were plenty of lessons in business, management and investment being displayed right in front of us. You just had to look hard.
Not convinced? Well, here are six stock tips you can take away from the World Cup:
The English lesson: Globalization can go too far.
The English Premier League is the most international in the world. The top teams such as Manchester United and Chelsea have drawn talent from everywhere. The theory is that even though there are few spaces left for English players, those who do make it through will benefit from playing alongside the best players. Er, wrong. Two dismal performances at successive World Cups by the English team suggest the national game is in sad decline. You can take all the global village stuff too far. In the end, people and companies do best when they stay true to what they are and who they are.
Tip: Buy Club Mediterranee SA. The vogue among big companies is to become ever more international, losing sight of their heritage as they create blander and blander products that are stripped of any distinctive national characteristics. A few, such as the French resort chain Club Med, remain rooted in the culture and traditions of their home country. They will do better in the long run.
The French lesson: Egos will get you nowhere.
For the English, the one consolation of a terrible World Cup was that the French were even worse. France’s star striker Nicolas Anelka was sent home for insulting coach Raymond Domenech at halftime while the team got beaten by Mexico. Afterwards, the players revolted, and the team was eliminated in the first round. It was humiliating. But when the egos get out of control, you are in big trouble.
Tip: Sell Barclays Plc. The British bank used to be mainly a retail financial-services company concentrating on the U.K. market. Now its Barclays Capital unit is a big competitor on Wall Street. Can it keep all those investment-banking egos under control? Dream on.
The Korean lesson: Isolation doesn’t work.
There were two Koreas playing in this World Cup: the North and South. While South Korea played impressive, free-flowing football and were unlucky to be knocked out by Uruguay, the North was just embarrassing, as anyone who watched their 7-0 drubbing by Portugal will testify. The contrast couldn’t have been more stark, and the lesson was a simple one. The country that was open to the rest of the world was developing fast, while the one that closed itself off was getting nowhere.
Tip: Sell Apple Inc. Sure, everyone loves those iPhones, iPads and iKettles, or whatever the geniuses at Apple come up with next. But it believes in closed systems that it controls absolutely. Sooner or later that will be its downfall.
The Italian Lesson: History counts for nothing.
Nobody came into the tournament with a better record than Italy. OK, they are a boring team, but that didn’t stop them from winning in 2006. Everyone knows the Italians will do fine even when they are complete rubbish -- that’s what the record books show. Except not this time. They were terrible, and they went home on the first plane.
Tip: Sell Toyota Motor Corp. True, it has been the most successful car company on the planet. But a couple of serious product recalls suggest Toyota has lost it. A great track record won’t help.
The German Lesson: Transform yourself with style.
We all know what the German team is like: Italy with worse haircuts. Dour, efficient, methodical and hard-working, they would grind their way through the tournament, and probably win it on penalties. But, hey, not this time. The Germans played attacking football that made the Brazilians look dull, and had the neutrals cheering them on. Only the ruthlessness of the Spanish defense snuffed out their creative flair. The moral? Give yourself a style makeover and the world will love you.
Tip: Buy Burberry Group Plc. A couple of decades ago, we thought it was the company that made those raincoats your grandmother wore. Not anymore. Now Burberry is one of the coolest brands around -- and likely to stay that way.
The Spanish Lesson: Keep believing and you’ll get there in the end.
Let’s be honest, we didn’t think they could ever do it. They probably didn’t think they could do it, either. One of the best soccer nations on Earth, but Spain had never been past the quarter-finals before. This time, they taught us all a lesson in perseverance. Hang in there. Don’t give up the faith. And you will make it in the end.
Tip: Buy BP Plc. Alright, the oil keeps gushing from that well. The chief executive is a joke. They have more lawsuits pending than the Chileans have yellow cards. But they can come back from that one day. They just need to believe, that’s all.

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