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Arsene Wenger, the asset manager

The human mind is a brilliant neural network with stunning complexities that only a human mind can fathom. Analytical and reasoning skills are great human faculties that we all conveniently call a “sixth sense”. It is this sense that make us a great race as we don’t just sit down and watch the world go round. We monitor, interpret, learn and, most importantly, apply our knowledge in all other aspects of life. If we had a nickel every time we heard some advice on the “lessons” or “morals” of a story recounted, we all would have been on the roster of Forbes’ richest. So please bear with me for the length of this article as I am going to take you through a journey and hopefully, at the end of it, we will be able to understand Arsene Wenger and his ways and cut the great man a sliver of slack. I would like to use my lesson from investments as a vehicle for this aforementioned exercise.

Buy and Hold:

Thierry Henry proved to be a great asset on the off the pitch for Wenger

Thierry Henry proved to be a great asset on the off the pitch for Wenger

The mindset of an investor works in mysterious ways much like God himself, except that the former’s activities seldom end in any goodness, holistically speaking. Investors always keep looking for opportunities to make a quick buck and this is what mostly leads to their fall. A great economist called Keynes once said that in the long term we all die, meaning that only the short term and medium perspectives matter. I respectfully disagree and believe that our decisions should always be made keeping in mind the bigger picture. Arsene Wenger is a genius in this aspect and he always gets hold of great players who are young and unaccomplished – just like buying a cheap stock. The secret to making the best returns is to hold on to the stock without looking to pocket some short-sighted gains. This is how Wenger works as none of his great finds have ever been sold prematurely. A Thierry Henry or an RVP have always paid enough dividends to the wise man and his followers before leaving the club. Wenger has always shown virtues like patience and belief in his players and this has borne great fruits. I am confident that the Cazorlas and Girouds will deliver the goods in due time. We just have to be patient.

Valuation is key:

Estimating the potential of a stock can be mathematically achieved through various models; however, a manager has to identify a raw talent based purely on his judgement. In this wide world of footballing coaches and scouts, not many can lay claim to such success and excellence in this field. The world knows Henry today because of the stupendous scouting skills of Wenger and there are many more on this conveyor belt, some of them shining bright while others yet to see the light of day. This is not to say that there have been no errors, but they have been few and far between. If I could be so bold, I would call Arsene the “Warren Buffet” of coaching. Wenger understands this business better than most, and knows what it takes to get the best out of his investments. Fans, let us repose trust in Arsene and his young guns as they will soon shower us with goals galore.

Risk-adjusted Return:

The perennial debate in financial markets is whether equity or bonds are the better asset class. This debate will probably continue long after the chicken-egg conundrum is solved and this is because they are like chalk and cheese. Equity markets deliver great returns but are quite risky and this is where a bond comes in handy as it protects your wealth. Arsene Wenger can be compared to a bond investment with solid, stable returns. Look at all the top 4 finishes in the Premier League Table and the qualification to the UEFA Champions League year after year. Having said that, it has been close to a decade since the Gunners won any silverware, with all the big-spending clubs amassing trophies around them. The concept to understand is ‘risk-adjusted return’; if we go by this, Wenger’s team has been quite fabulous considering there is a lot of sanity in terms of what they spend. Dear Arsene, couldn’t you just loosen those purse strings a little? We are definitely in need of world-beaters and they don’t come cheap.

Eggs in multiple baskets:

Jack Wilshere and Santi Cazorla - a perfect balance of local and international talent

Jack Wilshere and Santi Cazorla – a perfect balance of local and international talent

The investing term for this phrase is ‘diversification’ and it clearly plays a pivotal role in reducing a portfolio’s risk, and Wenger is definitely sticking to this axiom. Arsenal has a great bunch of  home-grown players, but at the same time, the club also has some phenomenal talent from all over the world. This is crucial in keeping and provoking the interest of the fans and spectators when English players take to the field, and this also avoids scenarios like the ‘Fabregas episode’ owing to the home-sickness of foreign players. The congregation of youth and experience is looking more promising this year than ever before. I am supremely confident that these wise strategies will pay off, and it is only a matter of time before Arsenal start delivering the results they are capable of.

The externalities:

Some risks are quite difficult to cover and be prepared for. This is what Investments 101 teaches you and it certainly has caught the attention of the Gunners’ fans. In spite of all of Wenger’s strategies and tactics, the team has ended up on the losing side once too often. This is clearly due to some dangers which the club never saw coming. The departure of its stellar players like Cesc, RVP, Nasri, Glichy, Song and many more has dented the strength of the team beyond immediate repair. But the way Arsene has steadied the vessel with such ease and efficiency would put even the captain of the Titanic to shame. Let us just hope and pray that this current crop of players stand by their coach. Right now, more than “one for all”, we have to adopt an “all for one” (Arsene being “the one”) philosophy and march forward to lay our hands on that coveted silverware soon.

In Arsene, we trust!

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