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Mo Salah illustrates the ‘inside view’ of Liverpool’s quadruple dream


Andrew Evans

Andrew Evans

Fund Manager, Equity Value

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Liverpool have now kept alive the hope of winning English football’s four big trophies longer than any other club but, as investors should also understand, ‘plausible’, ‘possible’ and ‘probable’ are very different beasts

A week into early May and Liverpool are still in a position to pull off what would be an unprecedented footballing ‘quadruple’ by winning the Premier League, Champions League, FA Cup and League Cup all in the same season. Include trophies such as the FA Community Shield and Liverpool’s Manchester rivals – both City and United – have won quadruples of a kind before but this would be the big one. Can they do it?

If all this has a whiff of déjà vu about it, it may be because, by mid-April last year, Manchester City were in a similar position and we wrote a piece that began in a similar vein. Give Liverpool their due, with the League Cup already won, places booked in both the FA Cup and Champions League finals and neck-and-neck with City in the Premiership, the club will now keep the dream alive longer than anyone has managed.

The previous best was the 2006/07Chelsea team, who were fighting on four fronts until 1 May, while dreams of a quadruple have lasted into April for three other teams this century. The 2008/09 Manchester United vintage made it to the 19th and Manchester City twice made it to the 17th – in 2018/19 and again last year. In the former campaign, City won all three domestic trophies but fell short in the Champions League.

Strikingly, by reaching all three cup finals, Liverpool will achieve the extremely rare feat of playing every single game of the season they could – yet hey might still end the season with just one piece of silverware. Using the ‘Three Ps’ tests Professor Aswath Damodaran outlined in this episode of The Value Perspective podcast, the prospect of a Liverpool clean sweep is of course still technically possible and arguably plausible.

Battling history

But what about his third test – is it probable Liverpool will complete the quadruple? Obviously, with every passing win, it becomes ever more so but, in addition to facing daunting opposition in both finals and hoping City will slip up at some point between now and the end of the season while they hold their nerve, Liverpool are also battling history. Those four quite-near-misses above show just how big a challenge the quadruple is.

That said, one of the club’s biggest stars reckons this could be the year it finally happens. In the wake of their Champions League semi-final win over Villareal, Liverpool’s prolific forward Mo Salah was quoted on the BBC as saying: “We fight for everything. We win one trophy, now we are in another final. We keep fighting in the Premier League. The quadruple is the target now. Maybe not at the start of the season.

“I am always honest and focus on the Champions League and Premier League. But now, why not? After we beat City in the FA Cup semi-final [I thought it was on].” Salah may simply have thought it polite to give his interviewer what they were after but there is also the prospect he was illustrating a very human behavioural bias  – against the broader, more fact-oriented ‘outside view’ and towards the so-called ‘inside view’.

As we have discussed in the context of other sports, such as racing, sailing and tennis, here on The Value Perspective, that involves making predictions based on a narrow set of inputs, which may include anecdotal evidence and misperceptions. A classic financial example is the way company managements are always so convinced a planned acquisition will add value even though history suggests some two-thirds disappoint.

No immunity

Nor should investors believe they are immune from the inside view – after all, every professional is adamant they will outperform their benchmark index even though the cold statistics show that, over three years, the average mutual fund manager does not. In which case, you might reasonably ask, what makes us believe, here on The Value Perspective, that we will outperform in the long run if the numbers suggest otherwise?

To offer one answer, every January we look to see what lessons we can learn from the previous year’s investments. We analyse what we did right in our portfolios – and what we did wrong – and, while the great majority of people would say that all comes down to what made and lost us money, the great majority of people would be completely wrong.

For us, the right lesson to take from the process is, if I took a particular decision 100 times, would I make money on average? As value investors, we want to make investments that make us money 60 or 70 times out of 100. As such, if an otherwise sound course of action turns out to have been one of the times we lose money, the lesson is not ‘never do that again’ but ‘just keep doing it – over and over and over’.

That, in essence, is what value investing is: a set of rules that helps to keep you on the right side of the averages so that, instead of being caught out by your own emotions – how ‘probable’, at the time, you believe any event is to happen or decision to play out – you put yourself in the best possible position to exploit the emotions of others.


Andrew Evans

Andrew Evans

Fund Manager, Equity Value

I joined Schroders in 2015 as a member of the Value Investment team and manage the European Value and European Yield funds. Prior to joining Schroders, I was responsible for the UK research process at Threadneedle. I began my investment career in 2001 at Dresdner Kleinwort as a Pan-European transport analyst and hold a Economics degree.

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