Last month, an incredible streak was broken in international sports. In a soccer match against Spanish League adversary Rayo Vallecano, Futbol Club Barcelona walked off the field with fewer minutes of ball possession than their opponent for the first time in 136 games. The game (which Barcelona won 4-0 nonetheless) marked the first time in three years in which Barcelona, or Barca, as it is popularly known, did not win the battle of possession.
One of the world's elite soccer teams, Barcelona has enjoyed success that stretches across decades. While borrowing from different soccer philosophies, Barca's style and system are unique in the soccer world. The principles by which the team plays, moreover, translate well into the world of investing. Let's review four hallmarks of Barcelona's style that have parallels in that most unheralded of sports: long-term equity investing.
The Barcelona style is affectionately referred to by fans as "Tiki-Taka" soccer. Tiki-Taka is a Spanish onomatopoeic term roughly similar to "click-clack," the sound of the ball being passed crisply from one player to the next using only one or two touches. This makes for remarkably efficient ball movement and furthers the primary obsession of possessing the ball. The Tiki-Taka concept maximizes ball sharing between players.
Outside game day, Barca players (whose average club salary would make any NBA owner reach for an Alka-Seltzer) relentlessly practice fundamental drills, some of which even preschoolers can emulate. In my personal favorite practice set, called "rondo," players form a small circle, and play keep-away from two chasers in the middle, using one-touch passes. While the speed at which the team moves the ball can resemble a Japanese pachinko game, the underlying premise is utterly simple.
Investing Parallel: Buy companies that structure themselves to exchange ideas quickly and fluently. Susan Wojcicki, employee number 16 at Google Inc (NASDAQ:GOOG) and now a senior vice president of product management and engineering with the company, had this to say on idea sharing in an insightful article entitled "The Eight Pillars of Innovation:"
By sharing everything, you encourage the discussion, exchange and reinterpretation of ideas, which can lead to unexpected and innovative outcomes. We try to facilitate this by working in small, crowded teams in open-cube arrangements, rather than individual offices.
This past week, Google's share price crossed $1,000 on stellar earnings.This is due in no small part to the profusion of ideas that are monetized year in, year out at Google. Like the Barcelona rondo drill, companies that crowd teams together and share ideas quickly have an edge.
Keep possession of the ball
By passing the ball among themselves and denying the opposition touches, Barcelona mathematically reduces their opponent's chances to score. Hoarding the rock also wears down the rival side, until a designated assassin such as Lionel Messi or Neymar da Silva Santos Júnior (known simply as "Neymar") slices through the defense for the kill.
While some criticize Tiki-Taka as boring, it requires an immense amount of physical skill and keen decision-making to keep the ball within your team's possession, to say nothing of the reserves of patience the team draws upon until it is the right time to strike.
Investing Parallel: Buy companies that don't give up market share easily. While The Coca-Cola Company (NYSE:KO)'s revenue growth rate has slowed over the last few years, the company just recorded its 25th consecutive quarter of increased market share by value. And just as statistically, teams that control possession tend to win more games, companies that obsessively increase market share while retaining profitability tend to make great long-term investments.