Date
20 February 2018
Josep "Pep" Guardiola Sala, who currently oversees the Manchester City football club. has come to be recognized as one of the most successful managers in world football. Photo: Reuters
Josep "Pep" Guardiola Sala, who currently oversees the Manchester City football club. has come to be recognized as one of the most successful managers in world football. Photo: Reuters

How to apply Guardiola’s strategy to stock investing

As Hang Seng index kept scaling new heights in recent days, the strong rally has left many people wondering whether they should take profit now or increase their positions. Here, I feel one can take some lessons and gain insights from analyzing the sporting strategy adopted by the Manchester City football club’s manager, Pep Guardiola.

The 47-year-old coach is the youngest among his peers in the world’s top football teams. He had been coach of Barcelona, Bayern Munich and now is the manager of Manchester City. As a manager, Guardiola has won 22 trophies since the start of his managing career, making him one of the most successful managers in world football.

Guardiola’s teams are recognized for pressing off the ball. Players press and harry the opposition collectively in an attempt to win back possession of the ball.

His players are required to organize attack with both wisdom and techniques. Also, his forwards are not only responsible for scoring goals, but also engaged in the collective press strategy. All his 11 players are involved in defense; therefore, his team typically takes possession of the ball for up to 70 percent of the time.

That strategy has enabled the team to play defensive when things are not in their favor, but scoring goals when the time is good.

Also, Guardiola tends to spread his bets on several forwards in a same team, rather than relying on only one superstar like Real Madrid Club or Paris Saint-Germain. For example, he had Lionel Messi, Carlos Sanchez, Andrés Iniesta when he was a coach of Barcelona. And Arjen Robben, Franck Ribéry and Thomas Müller were his favorite forwards during his time at Bayern Munich.

Now, he has a number of excellent forwards including Sergio Agüero, David Silva, Gabriel Jesus and Kevin De Bruyne in Manchester.

Taking hints from Guardiola’s play style, investors can take profit on stocks trading at elevated valuations and switch to more defensive plays such as utilities and local property firms.

If the bull market rages on, less defensive stocks will also go up along with the overall market. But if market suddenly collapses, these counters should be more resilient.

Besides, investors should also diversify their asset classes away from stock market to include things like physical property, or even take small positions in cryptocurrency.

Quality is also important. Like Guardiola who always go for top players to pull off his demanding strategies, investors should avoid, for example, companies with poor corporate governance record, or properties in cities suffering from population outflow.

The full article appeared in the Hong Kong Economic Journal on Jan 29

Translation by Julie Zhu with additional reporting

[Chinese version 中文版]

– Contact us at [email protected]

RC

Hong Kong Economic Journal columnist

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