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Your child won’t win!

Your child won’t win!

Now that’s a headline to grab attention.

Normally at Montgomery we consider ourselves somewhat unconventional – but nevertheless focused – members of the financial advisory space. Today, however, we tap into the rich vein of journalistic license afforded to authors during summer holidays and advise on something we are comprehensively unqualified to speak on – education.

At this time of year, newspapers are replete with the stories of rising private school fees that, like clockwork, seem to ‘soar’ by about 7 per cent. The only interruption to private schools’ ability to squeeze more money from the wallets of aspirational Australians was the GFC.

But even though the GFC is now taught as part of the ancient history syllabus, and it’s back to business as usual for bursars across the nation, it’s not the fees you should be worried about. What should concern you is the welfare of that little kid in your son or daughter’s class with the Tiger Mum parent.

I will never forget a teacher sharing a story with me over a campfire of her NSW kindergarten intake of 25 students all of whom had applied for the Gifted & Talented program!

From St Ives to Sutherland, Rosebay to Richmond, and Bellevue Hill to Bradbury, young kids are literally being ripped out of their dreams to swim at 5am, trombone at six and then play soccer, rugby and tennis four nights a week for their school and their local club with no weekends free to simply climb a tree.

And of course little Jacob, Sam, Nathaniel, Jack, Harry and Peter are all Mensa geniuses too, pushed by their parents to excel, to achieve, to better themselves, and most importantly, be the person their parents did not become.

Recently, I came across two stories that together offered an opportunity for highly strung parents to relax (never! I hear them scream). But relax you must, for even if all your efforts ‘pay off’ and your son or daughter reaches the summit and captains Australia in a pursuit worthy of an entry in our nation’s history books, they may still, when the fanfare has died away afterwards, find themselves standing in front of a camera, recording an ad for a vitamin supplement.

Like a generational wave, the pendulum swings and it will swing back. Your kids will not want to be the parents theirs were!

The first article, entitled Sports Stars Win With The Luck Of The Genes, went to the heart of the Sports Tiger Parent’s goal to see their child become the next Don Bradman, Ronaldo or Roger Federer.

Ed Smith writes that the idea your son or daughter can, with ‘hard yards’ and ‘tireless effort’, work their way to the top of their favoured sport, is misguided at best and possibly downright dangerous.

Citing the book The Sports Gene by David Epstein, Ed Smith writes, “A plethora of self-help books has tried to eliminate the idea of talent altogether, replacing it with the speculative theory that greatness follows simply from 10,000 hours of dedicated practice. Talent, in this analysis, is an old wives’ tale designed to keep you in your place, a cruel hoax that crushes dreams and thwarts ambition.

The war on talent uses this language of humane optimism, promising to decode and commodify a blueprint that can turn everyone and anyone into Lionel Messi or, if you prefer, Richard Wagner. The idea conveniently dovetails with the ‘tiger mother’ school of parenting (founded by the Chinese-American law professor Amy Chua), in which children are merely clay models that can be contorted into their parents’ preferred shape.

The chief beneficiaries of the war on talent will be not tomorrow’s athletes but tomorrow’s psychotherapists, who can look forward to a generation of future clients struggling to understand how, by some cruel quirk of mischance, they did not become Roger Federer, despite putting in the full 10,000 hours.”

In 2007, Donald Thomas, a basketball player from the Bahamas, became the world champion in high jump. Only eight months before, however, he was boasting about his slam-dunking prowess to fellow university students on the track team. They challenged him to jump six feet and six inches at the high jump. Without any technique, Thomas cleared seven feet. The previously unamused athletes rushed Thomas over to the athletics office. The following year and after only eight months of training, Thomas was crowned world champion. According to Ed Smith, “If he’d possessed even a rudimentary grasp of technique, he would have shattered the world record. Ten thousand hours? There wasn’t time. No, the key was Thomas’s remarkable Achilles tendons, 10 and a quarter inches long and unusually stiff – a little like a kangaroo’s.”

He goes on to suggest that “professionalism, with its homogenisation of training principles, [would] one day lead to a situation in which it is almost impossible to gain an advantage through practice (an advantage that was clearly possible in the early decades of professional sport, when some teams were slow to embrace proper commitment). However, when everyone trains optimally, just as when no one trains at all, sport will be dominated by the most naturally talented.”

By itself none of this will make a lick of difference to you. Most parents don’t have the resources, and the science isn’t at the point yet where we can pick the most naturally gifted 3 year olds who will respond best to training and for which the foregoing of all other academic study is sensible. So in the absence of the genetic test, millions of parents around the world will get their kids up at 3am to hike across town and throw them in a cold pool only to find out at the age of 15 that some other kid grew bigger hands and wider feet, and at six foot four, is clearly going to swim faster with less effort.

Perhaps this is where a little maths might help, and it’s also the point where the world’s smartest and arguably most successful gambler, MONA founder and Tasmanian, David Walsh, should step in.

You see, David Walsh uses probability as well as a little sport to argue that most parents are acting sub optimally by forcing their kids to do more sport at the expense of other studies.

My fellow finance show panellist, Christopher Joye, had the opportunity to interview David Walsh, and what came out if it was some of the most beautifully articulated argument for taking the wide, if mundane, road I have ever read.

“Asked what his advice is to any young Australian seeking to emulate his efforts, Walsh bluntly responds: “The pursuit of excellent is a load of shit.”

He believes many of us get deluded by a phenomenon known as survivorship bias, where we only see the winners … and do not properly observe the losers.

“This skews our expectations around the likelihood of success.

“If you ask Rafael Nadal whether tennis is a good modality to explore in life, he would probably respond ‘yes, it’s fantastic and has served me well’.

“Yet at any given time there are hundreds of millions of kids trying to be tennis players. Luck and ability, and the nuanced interaction of nature and nurture, all play a part and result in maybe 100 to 200 making a living.”

“The average living across tennis players is very low and most are doing things that perturb significantly their chances of succeeding in other domains.”

“Walsh contrasts tennis’s ‘high variance’ outcomes, which he equates to his own improbable path, to the prospects in accountancy.

“Everyone can do a half decent job. Everyone can make a living. And the average income is greater than the mean income for tennis players and, importantly, it is a low variance, or higher probability, result.”

“His advice to aspirational Australians is, in short, ‘not to live like I did’.”

Tiger parents may not like the message that emerges from the thoughts of David Walsh, who suggests that becoming an accountant is an option with a better aggregate outcome. Nor will they be pleased with David Epstein who might be right about the detrimental psychological impact on your child from someone else’s raw talent. But irrespective of whether you like it or not, the numbers suggest far fewer will make a living from cricket or high jump (or being barred from the world’s casinos) and many more will make their living as accountants, lawyers and national park rangers.

So our advice for parenting in 2014 is… relax. Let your kids be kids, let them dream of becoming Roger Federer but then let them turn their attention to climbing trees, collecting skinks or stamps, playing in the mud and even watching a little TV, because, according to the numbers, they’ll be catching the train to a cubicle at Deloitte before you know it.


Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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  1. It’s no surprise that the average person is … average. Unfortunately being called average is seen as an insult as it strips away the value we perceive ourselves of having.
    It is important that our kids are valued for who they are, and they are allowed to explore their desires and passions whether it is tennis, music or mathematics. As adults we don’t even apply this to ourselves, working in jobs we don’t like, rather than working in a field or job that we are passionate about and allowing ourselves to excel.
    Roger, on the topic of winning (or outperforming the average) and education, I have been looking into ‘Lifeplan Education Investment Funds’ (provided by Australian Unity and Comm bank), which have some very attractive tax benefits, as these operate as ‘Investment Bonds’ though the funds can be drawn upon at any time to pay for a child’s education expenses without incurring any tax liability. The reason why I mention this is that most of these funds follow an index such as the ASX200 or is invested in the same way as our superannuation (with balance, growth, diversified and cash investment options). I haven’t seen any of the funds offering a Value based investment options, is there any chance that the Montgomery Fund could offer this or even if the Montgomery Fund could approach the existing lifeplan education investment funds and have the Montgomery Fund listed as an investment option? … as deep down we all want to be better than average returns.



  2. Further to this, Svenson’s studies on “illusory superiority” – everyone thinks that they (or their child) are better than everyone else.

    In that study, 93% of the US sample and 69% of the Swedish sample put themselves in the top 50% of drivers (above the median). For safety, 88% of the US group and 77% of the Swedish sample put themselves in the top 50%.

    That’s mathematically impossible. We cannot all be “King of the Hill”, much like we cannot all be ‘better stockpickers than everyone else’. Every trade has two sides, and someone has to be wrong on one side for whatever reason.

  3. Roger, you should take a look at Hong Kong / Singapore, where it is currently going on. “Being a Child” was a documentary series that explored this whole thing (you might just be lucky and find it on YouTube…hint, hint), where parents are doing it to differentiate their kids from others, just so they can get into a particular school.

    Yes, the competition is that stiff, that parents have to say “Little Pei-Pei plays piano, sings in choir, does ballet and plays tennis” (to give the parents maximum “face”).

    Whether or not she is any good at them is another question, but the attitude of the “Fu Lai” (tiger mum) to the tutor is “I am paying you good money to teach her, you WILL make her good” (despite whether the kid wants to or has any talent or interest).

    It is “big face” to have a child that is made “talented”, despite what it might cost !

    Reminds me of Andrew Lahde’s letter – “The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies…and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”

    And that is the joke, that you cannot necessarily “buy education” to make someone a success at anything. Sometimes, it really just does boil down to raw talent….I personally know I will never be an olympic athlete, but I bet that thanks to my ongoing amateur sporting pursuits, I’ll be in a damn sight better shape than most people who don’t do anything !

  4. All this reminds me of a young man who runs a small business pouring slabs for new houses, flat out. Too busy and too tired to chase girls full-on, he listens as his friends announce the end of their affairs, seeks out and befriends the girl, pays attention to her story, gets her laughing again, and today has more female friends and more money than any of his mates, who tend to envy him greatly.

    Never pushed by his mother to excel, he nevertheless looks as fit as Roger Federer, is very popular, and the future looks bright, especially to him. He is a nett producer in our economy, but also loves to contribute as a consumer, to restaurants, clothing retailers, and new car dealerships. Way to go? I think so.

    Every young male should be told two fine stories concerning bulls. The first is of Ferdinand, who needed to smell the flowers. The second is of the young bull and the old bull, surveying from a hilltop a paddock full of young heiffers, the old bull offering a better idea of what the next move should be than the young one had considered…….Now THIS is education!

  5. Making it big in sport by numbers:

    Using soccer as an example:

    Thanks to Wikipedia:
    “According to FIFA’s Big Count in 2006, a total of 970,728 people in Australia participate in the sport, with 435,728 registered players, and 535,000 unregistered players”

    Currently there are 10 teams in the A-League. Assuming a squad size of 25, this means there are only about 250 spots for those kids that fall part of the 970K participants (or even 435K registered players) to make a living playing soccer professionally in australia.

    The above ignores the reailty as well that you are competing against not just people in Australia but the rest of the world and that out of those 25 squad players probably 1 or 2 will be lucky to go on and make it really big. Spending a good decade watching the NSL i was lucky to see Australias great cluster that became the nucleaus of the recent socceroo sides come through as youngsters but saw a great deal more vanish back into the state leagues and getting themselves real jobs.

    I also can’t help but think that in every kid who is pushed to try and become the next sporting hero there might be a great entrepreneur, engineer, surgeon, scientist etc that could change the world in other ways.

  6. Hi Roger,

    Merry Christmas and happy seasons greetings to you and your team!

    Thank you for your insight throughout the year, you and your team have done a great job.

    Your article is very spot on, as even though not a parent myself I have seen it in my experience both in soccer and tennis growing up. Parents trying to force their kids to emulate the best players in the current era or from their eras at the expense of everything else.

    If you look at for example the current tennis players, Roger, Rafa and Novak they all posess a great will to win within themselves. Especially in Rafa’s case, when he was a 7-8 his coach uncle Tony told him that if he had any chance of suceeeding in tennis he needs to learn how to play left handed as most tennis players are right handed and they struggle to play against left handers. There is no way any parent would have been able to make Rafa succeed if he did not want to do that himself. Or when Novak was 7 years old he told the coach not to be late to trainings any more when he ran late by only a couple of minutes I think I could only picture Lleyton doing the same.

    I think it is the same in all walks of life, as I’m sure in the investment world everybody would love to emulate Peter Lynch, Warren Buffet et al, but most do not see that sometimes luck plays a part as well or as Bill Gross in his article this year said that some of those great investors might have been lucky to be part of an epoch and that the true skill will be shown when the epoch changes and if they perform the same, he concludes that most of them will not live through the next epoch hence we will never know. (http://www.pimco.com.au/EN/Insights/Pages/A-Man-In-The-Mirror.aspx)

    I’ve come across a brilliant article discussing survivorship bias which was very enlightining.
    ‘When failure becomes invisible, the difference between failure and success may also become invisible’ (http://youarenotsosmart.com/2013/05/23/survivorship-bias/)

    I think we have not seen the real tiger parent yet as China is yet to hit the levels of consumerism that has been present in the Western World thus far. It will be an interesting navigation as China shifts its investment policy to consumerism.

    I think that Titanic is yet to leave the dock (no pun intended).


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