With the World Cup only a matter of weeks away, many English football fans are gearing up to show their support. You know the type: face painted white and red, St George’s Cross draped over the shoulders like a cape, drink raised to the sky at the first whistle, already absolutely certain that this – finally, definitely, without question – is going to be England’s year.
It is easy to laugh. It is also, if we are being honest, a very human thing – the capacity to believe completely in an outcome you desperately want, to filter out the evidence that complicates the picture and to treat hope as though it were analysis. England fans have been doing it since 1966, with no notable improvement to the result.
Investors do exactly the same thing, they just do it in slightly quieter settings, usually involving a laptop rather than a replica shirt.
This phenomenon has a name in behavioural finance: confirmation bias. It is the tendency to seek out and favour information that supports what we already believe, while unconsciously discounting the evidence that doesn’t. It is one of the most thoroughly documented and consistently costly biases in all of investing and nobody is entirely immune. The question is whether you have built enough structure around your decisions to catch it before it becomes expensive.
Here is how it typically plays out – an investor becomes enthusiastic about a particular stock, fund, or sector. The initial enthusiasm feels like conviction, it has the texture of a well-reasoned view. And so, they start reading. The bullish analyst note gets bookmarked, the sceptical piece gets skimmed and set aside and the counterargument from a respected source gets rationalised away. By the time the investment is made, the investor is completely convinced.
The evidence feels overwhelming. It is, of course, curated. Not deliberately, not dishonestly, but curated, nonetheless. The brain has been working as a very enthusiastic press secretary, presenting only the material that supports the conclusion that was already forming.
England fans are masters of this process. If you ask one in the week before a tournament, they will give you 15 reasons why this squad is different, why the manager has finally cracked the system and why the draw has fallen kindly. They are not lying; they genuinely believe every word. They have simply spent the preceding months consuming the content that made belief feel inevitable.
Financially, this behaviour can have significant consequences. Investors who fall in love with a particular stock tend to hold it too long after the story starts to change. Those convinced of a macro theme often ignore the early signals that the thesis is faltering because those signals don’t fit the narrative they have built. The emotional commitment to being right becomes an obstacle to actually being right.
There is a practical antidote, though it requires deliberate discomfort. Before committing to any significant investment decision, actively seek out the strongest possible case against it, not a straw man version, but the best argument the most compelling reason why the thesis might be wrong. Read it seriously, sit with it, and then ask whether it changes anything.
This is what good analysts do, and it is also what the best football managers do – watching footage of the opposition’s strengths rather than just cataloguing their weaknesses and building a game plan that accounts for what might go wrong rather than assuming everything will go right.
Diversification serves a similar function in a portfolio, not just as a risk-management tool in the traditional sense, but as a structural defence against the overconfidence that comes from believing too completely in any single story. A portfolio spread across geographies, asset classes and sectors cannot be entirely captured by any one narrative, however compelling that narrative feels in the moment.
None of this means enthusiasm is wrong. Conviction is valuable in investing. The problem is not caring about your portfolio; it’s caring so much about being right that you stop seeing clearly.
The England fan and the overconfident investor share the same fundamental vulnerability; they have decided how the story ends before it has been played. In both cases, the market, or the opposition, often has a habit of writing a rather different final chapter.
In both football and investing, uncertainty is unavoidable, which is why diversification matters. A balanced portfolio avoids relying too heavily on any one outcome, much like England fans learning, cautiously, to manage expectations. Of course, that won’t stop many of us believing that football might finally be coming home.
