Mar

19

Last week I was in Sweden and I went to see my first Ice Hockey match (Frölunda HC vs. Djurgårdens IF, score 2 - 5 ).

Frölunda HC is 7th in the standings and Djurgårdens IF is 2nd in the Swedish Elitserien Regular Season. The game was very fast and it was difficult for me to understand schemes, tactics and strategies. What was obvious, however, was the superiority of the winning team, as they were ahead from the very beginning. They were also much better in managing the game, keeping control of the puck for most of the time. Also the players role was difficult to identify (except the goalkeepers) due to many and fast changes during the game. It was quite exciting at the beginning, as it was the first time I went to a game, but ended up being quite boring as it was obvious who was going to win.

It reminded me how the stock market appeared to me when I was a newbie (not that I am a master now). Daily movements seem very fast and random, like the actions in the game. The role of different shares in the market is also not obvious, e.g., defensive stocks vs. high volatility stocks. Trends and final result instead are quite different. In markets you identify long term trends only looking backwards. In the game the final result was quite easy to predict, given the superiority of the winning team. But only because the game has an end while the market is always ongoing…

Jay Pasch agrees:

Hockey is a consummate sports analogy for trading — fast moving, full of energy, full of fight and emotion, tremendous back and forth. Nearly every winning move, from skate to stick, is chock-full of deception. Try it, you'll see…

So does Tom Marks:

The dynamics of hockey do bear a resemblance to what happens in markets. To the undiscerning eye the players' movements seem ruled by randomness, with everybody in haphazard pursuit of the puck. But there are hidden patterns, as those player movements are largely the function of strategic schemes, both offensive and defensive, that are tactically superimposed on the location of the puck. They use very similar types of schemes in lacrosse.

Likewise in trading, not everybody is desperately chasing the price. Though, just like with the puck, it's advisable to have a good idea of where it is, lest one be ultimately caught out of position like a defenseman in hockey.


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2 Comments so far

  1. Nick Pribus on March 19, 2010 12:38 pm

    Hockey is great. It’s the only sport I would gladly pay money to watch, and maybe it is the market analogy that draws me. A sport sending you to prison (penalty box) for infractions called slashing, high sticking, tripping, roughing, spearing, boarding, and let’s not forget fighting, is close to the market and real life. And the market has done all those things to me at one level or another.

    I would love to score the empty net goal with AIG, Fannie, or Freddie, it seems abundantly clear there is no equity value whatsoever, if I could just get my hands on the puck, ie some shares to borrow, shoot it, or short it, for an easy score.

  2. J Drake on March 20, 2010 5:04 am

    Hockey suffers from the same results-oriented thinking we see in market policy. For instance, NHL management seems content to punish dangerous play only when it results in an injury. It may require a career-ending injury for a Crosby or an Ovechkin to change this.

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