The World Cup is drawing to a close, and with it comes the effort by investment banks to predict the outcome of soccer tournaments.
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Joachim Clement, a strategist at London-based Librem Capital who analyzes the stock market for his day job, has the advantage of correcting his previous two predictions by choosing Germany in 2014 and France in 2018.
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According to him – no other bank analyst chose the last two winners. Macquarie picked Germany in 2014 but made a mistake with Spain in 2018. Nomura got into the business of prediction by choosing France in 2018. Goldman Sachs, UBS and ING each performed well in the last two tournaments.
Clement’s model uses factors including GDP per capita, population size and temperature, as well as FIFA ranking points. But he says those variables explain only 45% of the variation in success, meaning that 55% of the results just come down to luck. So, there is also a fate variable in his model.
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He says this World Cup will be different, as it will be in the middle of his season rather than at the end. “Unlike the last World Cup, players like Robert Lewandowski are more likely to be fit and at the peak of their abilities. They have played fewer matches in their home league or the Champions League and thus are less tired,” says Clement.
Another difference is that national sides will not have as much practice time – a hindrance for sides such as Spain and Germany that rely on team coordination.
Anyway, onto the prediction. He does not choose the favourite, Brazil, and instead expects Lionel Messi-led Argentina to beat England. The two sides have some history with each other – literal warfare, of course, but also two matches where each side claimed the other unfairly won, apart from the 1998 match where David Beckham received a red card. .
Oh, and there’s a little stock-market analysis, too. During the World Cup, the US market underperformed by 3.9% compared to normal periods. And the markets of the match winning countries tend to outperform the next day.
