You might not know this but the North Stars won the Bermuda Ball Hockey championship a week ago. A team that may not have ranked first place upon reviewing the statistics and one that battled all year to make the playoffs came out on top.

What does this team and ball hockey have to do with investing? There are a few lessons here.

1. You Can’t Win If You Don’t Believe.

If the Stars never believed they had a chance there is no way they would have even made the playoffs. If you don’t believe in investing and the stock market you simply are not going to invest. Without confidence in capital markets and what they offer there is no way you will begin investing and almost no chance you will remain committed when things turn ugly.

I have often heard people proudly suggest they never invest in the stock market or even financial assets because they only believe in tangible assets like real estate. Too bad because history has proven that financial markets are resilient and have offered superior returns over time.

2. Stick To Your Game Plan.

The Stars’ game plan was not flashy. Grit and hard forechecking was one of its basic strategies. The key, however, was not wavering. In investing it pays to not chase hot fads or investment euphoria. Stick to your long term plan and allocations and fade the incessant desire to constantly shift strategy. In the long run, a sound plan should align with your ultimate goals and get you there. Make sure you have an investment plan, understand and stay within your risk tolerance and maintain that longer term view.

3. Don’t Get Overconfident.

Respect for your opponent and their abilities are crucial to winning hockey games. Hubris is a killer. Respect keeps you alive and alert. Respect for markets is also crucial. In the investing world, overconfidence can be very detrimental to your performance. Terrence Odean’s study in 1998, “Volume, Volatility, Price, and Profit When All Traders Are Above Average”, found that overconfident investors traded more frequently and that the traders who actually traded the most, on average, received significantly lower returns.

4. Diversify Your Roles.

All players on a team have roles. If not explicitly they are pretty much applied automatically. If all the guys went out only to score goals no one would play defence. The same concept applies to investing. Your entire portfolio should never be filled with an entire roster of “highflying goal scorers”. When the pressure is on it pays to play defence and various asset classes offer a reprieve that lets you bounce back or pounce when needed. Just like a great hockey team, a great portfolio is balance.

Sports enthusiasts know that a team’s performance depends on more than luck. From game to game every team has highs and lows accompanied by speculation on its ability and ultimate outcome. Luck of course does factor into outcomes but the fundamental composition of the team is paramount over the course of the entire season. Investing is no different. Adhering to time tested principals will greatly enhance your chances of victory in the money game.

Nathan Kowalski CPA, CA, CFA, CIM is the Chief Financial Officer of Anchor Investment Management Ltd. and can be reached at nkowalski@anchor.bm

Disclaimer: Nathan Kowalski was a member of the BBHA championship team the Minnesota North Stars. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by the author to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. Readers should consult their financial advisers prior to any investment decision. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.