England cricketer Ben Stokes has produced several of the most memorable sporting performances of the last 20 years. Almost single handedly, he won the 2019 cricket World Cup for his country (yes, my Kiwi friends, with a little help from the umpires). Just a month later, he broke Aussie hearts with one of the best Ashes innings ever played—135 runs at Headingley for a highly improbable victory.
When historians look back at the scorecard, they will see everything Stokes is renowned for. Devastating strength and power; Stokes belted 19 boundaries in his innings, including eight sixes. And the ability to perform his best under extraordinary pressure; the final 70 runs were scored in partnership with England’s last and worst batsman, Jack Leach, who contributed just one of the 70.
But they will probably miss something just as important.
Stokes spent the first several hours of that Headingley innings waiting. He scored just two runs off the first 67 deliveries bowled to him. One of the world’s most explosive batsmen did nothing but block the ball for hours.
And in this, there are important lessons for all of us.
Knowing your own strengths and weaknesses as an investor is critical. The “right” strategy is going to be different for all of us. You might have a particular skill selecting management teams, identifying successful turnarounds or finding underappreciated growth opportunities. Work out what you do well, and stick to it.
But recognising which environments your strengths are suited to is equally important.
There are few better than Ben Stokes at belting a cricket ball into the stands. But, with his team crumbling around him and the Australian bowlers full of confidence, it wasn’t the right time for aggression. So Stokes waited. He waited until the Australian bowlers were tired. And he waited until he started to run out of partners, forcing him to take more risk. Then, and only then, did he bring his strengths into play.
Time to be contrarian?
During the past six months, the rewards for being contrarian have been enormous. In my view, the disparity in stock valuation in today’s market remains highly prospective. For the two years prior to this one, however, trying to be contrarian in a mostly sensible market was the cause of some of our biggest missteps.
Identify your strengths and stick to them, yes. But identify when to use them, and that’s the secret to truly outstanding returns.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.