The investment lessons from the Chris Froome doping accusations

The aftermath of cycling champion Chris Froome being cleared of any wrongdoing following a positive drugs test offers two parallels with market traps into which investors often fall


Roberta Barr

Roberta Barr

Head of ESG, Equity Value and Analyst, UK Equity

Even by its recent high standards, 2018 has been a remarkable year for British cycling.

Following Simon Yates’s victory in the Vuelta a España earlier this month, the world’s three biggest bike race titles are now in British hands – Geraint Thomas having won the Tour de France in July and Chris Froome the Giro d’Italia back in May.

Given the accusations of doping that hung over Froome for much of the last 12 months, however, it has by no means been a perfect year for British cycling – and, while endurance is clearly an integral part of the sport, is that something the four-times winner of the Tour de France should have had to go through?

Here on The Value Perspective, we feel certain aspects of the case have echoes of traps into which investors can often fall.

What happened to Froome?

In case you are unfamiliar with the story, a drug test conducted while Froome was on his way to winning last year’s Vuelta a España came out as being above the allowed limit of asthma medicine salbutamol.

After much speculation about his future – fuelled by details of the case being leaked to The Guardian and Le Monde in December – Froome was cleared of any wrongdoing by the sport’s governing body, the UCI, only this July.

According to this informative feature in Cycling Weekly at the time, neither the UCI nor Team Sky, for which Froome competes, offered an explanation as to why he had been cleared.

The previous month, however, the same magazine had reported how Froome was planning to base at least part of his defence on a paper from the Centre for Human Drug Research in Leiden in the Netherlands.

Entitled Futility of current urine salbutamol doping control, the research recalibrated Froome’s salbutamol reading to one much closer to the ‘actionable threshold’.  It also suggested the World Anti‐Doping Agency’s salbutamol test was unsafe given test levels can vary wildly and that some 15% of the tests could produce so-called ‘false positives’, in which case any presumption of guilt on an athlete’s part could be seen as harsh.

False positives - not just a medical phenomenon

In sport, a false positive occurs when a doping test that should have turned out negative and so proved an athlete had not exceeded any drug limit actually produces a positive result – in effect making a ‘false accusation’.

This can happen in investment too, with the market showing itself all too willing to jump on the most spurious of perceived correlations – as we have argued in articles such as Just an illusion.

Furthermore, as we discussed in The Jellybean Trilogy, the more tests you run on a hypothesis, the more false positives you will find.

And, as this Forbes piece notes too, modern super-computers are capable of running huge numbers of tests on ever more tenuous hypotheses, leading anyone from sports administrators to investors to – in the case of health scare stories – tabloid readers to jump to all the wrong conclusions.

Humans are stubborn - potentially a weakness in investment

And, having jumped to all the wrong conclusions, human beings in general – and investors in particular – can often find it very difficult to change their opinions, even in the face of new evidence indicating they should.

While clearly no guarantee that Froome was not doping through the use of his asthma medicine, a test shown to be inaccurate 15% of the time does leave plenty of room for doubt.

Yet to judge from some of Froome’s treatment this summer by press and public – particularly as he competed in the Tour de France in July – some people, having made up their minds on his guilt, are very disinclined to change them.

An unemotional reading of the facts would indicate Froome should be treated as if the doping episode had never happened but of course emotional biases are as rife in sport as they are in markets.


Roberta Barr

Roberta Barr

Head of ESG, Equity Value and Analyst, UK Equity

I am an investment analyst for the Global Value Team, having joined Schroders in 2016 as part of the graduate programme. After spending a year as an investment analyst for the Quantitative Equity Products team, I realised my affinity for the deep value investment mindset and joined the Global Value Team in 2017. Prior to working for Schroders I studied mathematics at Oxford University.


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