3 Investment Lessons: From Jamaica’s 2024 Olympic Experience

What an Olympics Games Jamaica had. Prior to the games USA Today’s article, dated August 4, 2024, predicted that Jamaica had the potential for fourteen (14) medals, with eleven (11) of them (78%) being from the track.  Instead, we medaled six (6) times, and four (4) of the medals, (67%) were from the field events. Today we will examine three (3) financial lessons from Jamaica’s 2024 Olympic results.

 

1. Why Diversification is Key – “Jamaica took 10 of the 12 women's 100 medals available in the four Olympics before Paris, including a clean sweep in Tokyo, and won four of the previous five 200s” (www.reuters.com/sports  “Jamaica's sprint dominance comes to a sudden end in Paris” August 11, 2024).  No Jamaican fan could have predicted 0% returns in these events.  If we had not diversified into the field events, we would have had a dismal Olympics.  
   
   Similarly, it is advisable to place your money in multiple assets, such as stocks, bonds, real estate, etc. rather than only one asset type.
   
   Question:  Is your portfolio adequately diversified, so negative returns on an asset do not totally erode your overall returns?
   Action:  Talk to your financial advisor about diversification. Here’s a tip, investing in Unit Trusts is an easy way to diversify your investments. 
    
2. Why Excellent Investments Still Don’t Guarantee Consistent Returns - Due to injuries, two beloved athletes could not compete. This is similar to having historically excellent investments in your portfolio; which for a period may not yield the returns projected.  If there is no opportunity for recovery, you should divest.  However, if “injuries” are temporary, you should continue to invest.
   
   Question:  Do you have “injured” investments?   Should you invest or divest?
   Action:   BOJ announced that, effective August 21, 2024 the policy interest rate was reduced by 25 basis points.  This is the first reduction in two (2) years.  If the reduction continues as a trend, it will signal that prices of good stocks, bonds will increase. Consider the adding investing in the JMMB Income and Growth Fund and JMMB Bond Fund before the prices increase.
    
3. Why Analysts Are Important - The typical sports enthusiast may ignore warning signs as they cheer for their favourite athletes, based on their previous performances.  However, seasoned sports and financial analysts make predictions based on historical data, current performances, competition and the environment.   Therefore, while hopeful, some analysts are more aware of the risk of injuries and their potential cost.
   
   Good analysts see most looming crises before the average investor.  They will then assess the possible impact, prepare investors and position their portfolios.
   
   Question:  When is the last time that an expert analysed your portfolio? 
   Action:   Set up a meeting with your financial advisor for a portfolio review

 

Written by: Michelle Sinclair-Doyley, Corporate Manager, Group Financial Partnership Support & Financial Education