Raising your game

Raising your game
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As the smell of freshly cut grass permeates the air and the consumption of strawberries and cream increases exponentially, it can mean only one thing – the start of the Wimbledon Championships.

Yet again, the hopes of British tennis enthusiasts rest on Andy Murray’s shoulders. Can he win Wimbledon for a third time and emulate the exploits of Fred Perry way back in 1936?

Advances in both training techniques and sports psychology mean that, nowadays, strict diets, high level fitness workouts and emotional well-being form the basis of match preparation for all professional tennis players.

As the winning margins in elite sport continue to diminish, players and coaches alike are searching for those small, yet vital, incremental improvements in performance that can ultimately mean the difference between becoming Wimbledon Champion or being beaten in the first round by a rank outsider!

Small differences in the construction of asset models can also have a significant effect on their performance and the results produced.

The key is to build a model that provides a consistent set of feasible, realistic long term forecasts.

The question is how?

Detailed preparations

Diet, the latest physiotherapy techniques, positive mental attitude and having access to the best coaches all play a pivotal role in the success of a top class tennis player. Selecting the best blend of skills and expertise enables players to optimise their training and assists them in achieving peak performance when it matters most.

Take Rafael Nadal, for example. Plagued by injury throughout 2016, Rafael ended his season early. Yet, armed with a new coach, Carlos Moya, and altering his training regime, he recovered sufficiently to allow him to not only reach the final of the Australian Open final in January this year but to win “La Decima”, his 10th French Open title at Roland Garros only last month.

Detailed analysis and preparation not only help Rafael and other players to overcome injuries but to create strategies and tactics for optimising performance and fostering a winning mentality.

The same concepts hold true for asset models.

Asset Models

Financial forecasting is complex. The best forecasting methods not only need to be well designed, in order to engage consumers, but the underlying asset model used for the financial planning must result in realistic future outcomes that are both suitable and reliable.  Only quality inputs into an asset model will support consistent, credible outcomes for investors.

Forecasting methods must, therefore, not just rely solely on generalised inputs but must take account of detailed aspects of the economy including inflation and interest rates to produce plausible and realistic scenarios. This will not only help individuals to, independently, understand the potential range of outcomes from different financial strategies, but will also allow them to make informed decisions which will directly impact their future wealth and lifestyle.

Inflation

For forecasts to be effective, individuals need to be able to relate the outcomes from an asset model to their investment goals. In order to do this, investment forecasts need to take account of inflation.

Investors need to have realistic expectations about the outcomes that may be achieved so they can make sensible and suitable decisions about the investment opportunities that are available to them. Telling someone that £10,000 invested for 20 years could give then £25,000 may sound great but misses the point that £25,000 would only buy £15,000 worth of goods at today’s prices.

Interest rates

When interest rates increase, the future expectations for cash and bond returns also rise. In addition, the relative strengths of different currencies are linked to interest rates which, ultimately, determine the market expectations of future exchange rates.

A top performing asset model needs to provide a realistic view of the potential evolution of interest rates over the long term. However, in this time of low interest rates, not all asset models are currently producing realistic outcomes. EValue, on the other hand, has undertaken a considerable amount of research and effort to improve its own Insight asset model to take account of the current low yield environment and provide credible forecasts.

Plausible and realistic scenarios

When used to produce a range of possible investment outcomes over the long term, leading asset models produce realistic projections which enable investors to make sensible financial decisions. This means that not only are the overall forecasts realistic but each individual scenario, which makes up the forecast, is also sensible and capable of occurring.

Suggesting a potential outcome which, in reality, is impossible is obviously not a winning strategy for consumers trying to make informed investment decisions.

Summary

Detailed preparations and insight not only assist elite tennis players in creating a winning formula  but also enable quality asset models to be built with strong foundations and a clear philosophy for producing better outcomes for all investors.

Perhaps, with thorough preparation, continued use of ice baths and employing the best expertise available, Andy Murray can fulfil British tennis fans’ hopes and dreams by lifting the Wimbledon trophy aloft once again on 16th July.


Ben Cicchetti, EValue's Marketing Manager

Ben, an Associate of the Chartered Institute of Marketing, has worked in the financial services and technology industries for over 10 years. He is passionate about injecting creativity throughout our marketing and communicating how our solutions can truly make a difference to people’s financial futures.

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