Forward thinking - There is a value lesson to be found in Michael Owen’s career of two halves


Andrew Lyddon

Andrew Lyddon

Fund Manager, Equity Value

Michael Owen has just announced he is to retire from football at the end of this season, bringing to an end a career among whose highlights can be counted 40 international goals – a tally that puts him fifth in the all-time standings for England. So is there really a value lesson to be learned from the career of one of England’s most prolific centre forwards? Here on the value perspective, we believe there is.

Owen played his first senior game for Liverpool in May 1997 at the age of 17 and made his debut for England a year later, announcing himself on the global football stage with a memorable solo goal against Argentina in the 1998 world cup finals. When he ends his career in May after a handful of matches for Stoke City, he will be 33.

However Owen’s career can very much be described as ‘a game of two halves’. By 2005, the 25-year-old Owen had scored 35 times for England and, at that point, prevailing wisdom held he was a certainty to smash bobby Charlton’s record total of 49 goals. Prevailing wisdom could also point to some persuasive reasons for thinking so – for example, the early start to Owen’s career, his apparently consistent form and the fact he had been relatively untroubled by injury.

Unfortunately, over the next eight years, a combination of bad luck with injuries, loss of form, some questionable transfer decisions and so forth meant Owen was unable to come close to living up to those expectations. After 158 goals for Liverpool and 14 for Real Madrid up to 2005, he has since only managed 48 more goals in eights years playing for Newcastle United, Manchester United and Stoke as well as scoring just five times more for England.

Such was the strength of the first half of Owen’s career, that even after this less impressive second half his overall record is still formidable. However, relative to expectations, those who on the evidence of his achievements up to 2005 backed Owen to go on and eclipse Charlton’s record, have ended up feeling disappointed. You can also be sure that the time at which those people felt most confident in this view was when Owen was at the height of his powers and it looked like nothing could stop him.

Stock market investors should be every bit as careful about extrapolating current trends into the future with high degrees of confidence as football fans and pundits. In today’s equity markets there are a large and growing number of stocks with rich valuations that suggest investors have high degrees of confidence about their future performance and success. However as the latter half of Owen’s career illustrates, high expectations can be very hard to meet – let alone beat – and often result in disappointment.


Andrew Lyddon

Andrew Lyddon

Fund Manager, Equity Value

I joined Schroders as a graduate in 2005 and have spent most of my time in the business as part of the UK equities team. Between 2006 and 2010 I was a research analyst responsible for producing investment research on companies in the UK construction, business services and telecoms sectors. In mid 2010 I joined Kevin Murphy and Nick Kirrage on the UK value team.

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