By Grace MacDonald, CFA
With the 2024 Olympic Games upon us, the team at Genova is watching and cheering on our Canadian athletes in Paris. Like many of you, we grew up playing sports which we still relish today. While we may not have become professional athletes but instead professional wealth managers, we can draw many parallels between sport and investing. Of all the Olympic events, the Modern Pentathlon – a sport that tests the strength of a “complete” athlete – serves as a fitting comparison.
The modern pentathlon comprises four events combining five sports – riding, fencing, swimming, and running and shooting – each demanding a distinctive set of skills.
Investing, on the other hand, relies on four primary factors to be successful – buying good businesses, patience, a long-term approach, and adaptability – sharing comparable characteristics to its Olympic event counterparts.
Riding, on an unfamiliar horse through a show jumping course, requires the athlete to quickly become one with the horse so that together they can navigate a myriad of obstacles in a calm and controlled manner. A key factor driving the success of the rider is the quality of the horse they are given. Similarly, the success of an investor is largely determined by the quality of the investment. Fortunately, in our profession, we get to choose the investment. We seek to invest in good quality businesses that will allow us to navigate through obstacles in the market in a calm and controlled manner. By our definition, a good quality business is one that is financially sound, profitable, and growing.
Fencing relies heavily on patience and defense to strike your opponent when the opportunity arises, without risking your cover. Patience is equally critical in investing. By buying shares at attractive prices, we aim to produce strong returns while reducing risk. We do not rush our process by overpaying for shares as this would put the capital at risk of loss. Instead, we take our time and remain patient, waiting for the opportunity to strike to present itself.
Swimming requires tremendous endurance. At Genova, we take a long-term approach to investing, which mandates that the businesses in our portfolio have the endurance to make it to the finish line. Our portfolio of good quality businesses, those with a promising future, we invest in for the long term to share in that future prosperity.
Running and shooting, referred to as the Laser-Run, is where athletes alternate between running and shooting at five targets from a distance. Switching from running to shooting with accuracy requires the athlete to be adaptable without losing sight of the finish line. Similarly, markets can be turbulent, requiring the investor to adapt to changing market conditions while staying steadfast in their investment philosophy. Maintaining sufficient cash in the portfolio allows us to be agile in the market and meet liquidity needs as they arise without running astray from the investment strategy.
Given the diversity of the events involved, the modern pentathlon is without a doubt an extremely challenging sport that tests athletes both mentally and physically and requires a variety of skills. Like the championing athlete, an investor must focus on quality, patience, endurance, and adaptability to take home the gold.
| AVG Annual Return to June 30, 2024 | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception Nov. 30, 2006 |
| Genova Private Management Composite | 2.4% | 5.4% | 9.6% | 12.0% | 12.6% |
| S&P 500 Total Return Index (C$) | 28.9% | 13.7% | 16.1% | 15.7% | 11.4% |
| TSX Total Return Index | 12.1% | 6.0% | 9.3% | 6.9% | 6.2% |