Summer – July in particular – is when tennis truly comes into its own. It’s the season of Pimm’s, strawberries and panama hats on the lawns of Wimbledon, of languid Sundays with televisions quietly murmuring indoors.
And for those who spent childhood summers brandishing an oversized racket on a scruffy suburban court or a seaside one, with the wind cutting across sun-bleached lines, tennis is more than a sport: it’s an archetype. A lesson in finding order within chaos.
To celebrate the season – and in conjunction with the Wimbledon final – we’ve explored a few analogies between tennis and investing. We hope this piece will appeal to the most curious readers, to seasoned followers and newcomers alike, and to those who see in the markets not just charts and returns, but a contest of positioning, patience, and strategy.
The arithmetic of the game
There’s something mathematical about how victory is secured in tennis. A great player may lose nearly half the points contested, yet still go on to dominate tournaments and opponents for years.
Over the course of his career, Roger Federer won just over 54% of the points he played. And yet, despite winning only marginally more points than he lost, he is remembered as one of the greatest players the sport has ever seen.
That’s the nature of tennis: brilliance and the occasional flourish don’t decide a match. What matters is the ability to capitalise on consistency, minimise errors, and winning just enough to tilt the balance.
The stock market follows a similar logic. The S&P 500 has closed higher on just over half of all trading days – around 54% – yet with patience and discipline, it has historically delivered growth for more than a century, but future returns are uncertain and may differ significantly.
Imagine a computer screen: prices ticking rhythmically – up, down, up, down. There’s a quiet cadence to it, a meditative repetition, like the soft, steady bounce of a ball during practice.
Like tennis, markets are shaped by a kind of systemic chaos – subtle patterns, calculated risks, and unpredictable swings that only make sense with time. But in both worlds, outcomes are rarely determined by the noise of every moment.
Victory goes to those who make fewer mistakes
Craig O’Shannessy, one of the foremost analysts in professional tennis and a former strategy consultant to Novak Djokovic, has shown that over 65% of points at the elite level are lost through unforced errors rather than won with outright winners. The best players, above all, excel at not missing.
The same principle applies to long-term investing. For most, the surest path to building returns isn’t about spotting the next star performer or perfectly timing the market – it’s about avoiding the costly mistakes that erode capital: panic selling, excessive trading, overconcentration in a handful of stocks, or chasing the latest speculative trend.
Like a seasoned player who approaches the net only when the odds are in their favour, a thoughtful investor takes risks that are selective and measured – not constant or indiscriminate.
The score doesn’t tell the whole story
As we’ve noted, even the best tennis players can lose nearly half the points they play and still dominate. Federer, for example, won just 54.1% of all points throughout his career – yet he secured victory in over 80% of his matches.
That’s because tennis – like the market – is not a linear game. It’s structured around breaks. You don’t need to win every point. You need to win slightly more often than your opponent at the key moments and let the math do the rest.
The parallel with the market is striking: since 1928, the S&P 500 has finished flat or higher on roughly 54% of trading days. And, as in tennis, this modest statistical edge – repeated consistently over time – compounds into powerful, long-term results.
It’s counterintuitive – and that’s what makes it fascinating: in both worlds, you don’t need to hit every target. You need to secure those few points or those few trading days that carry disproportionate weight.
A study by J.P. Morgan showed that between 1999 and 2018, if an investor had missed just the 10 best trading days, their annual return would have dropped from 5.6% to 2%. Missing the top 20 would have turned returns negative. Those few days – often right next to the worst ones – are the financial equivalent of break points: miss them, and you lose the set, and with it, the match.
Only a few winners make history
In tennis, the Grand Slams are almost always won by the same three or four players. Rafael Nadal, Roger Federer, Novak Djokovic dominated a generation, and now Jannik Sinner and Carlos Alcaraz are at the top of the game.
This concentration of success isn’t an anomaly – it’s a statistical rule. Talent is distributed asymmetrically, and the structure of rankings, seeds, and draws amplifies the advantage of those who’ve already won.
The same pattern applies to markets. A study by Hendrik Bessembinder, covering over 29,000 U.S. stocks between 1926 and 2016, found that just 4% of listed companies generated all of the net market return above Treasury bills. These results depend heavily on timing, market conditions, and assumptions – and may not repeat.
The remaining 96% either underperformed or lost money. In fact, just 86 stocks created about $16 trillion in wealth – more than half of the market’s total gains.
In other words, the entire market’s return is driven by a handful of companies – often very difficult to identify in advance.
This has two crucial implications for investors:
- Diversification is key to increasing the odds of holding those few game-changing stocks.
- Patience is essential to let winners grow and compound: these companies often take years to emerge, but the outcomes can be exponential.
Selective risk: knowing when it’s worth it
In tennis, every shot is a balance between risk and control. The ability to read the moment – to judge the context – is everything.
The greatest players use variance strategically: taking on risk when the moment demands it, and holding back when patience is the wiser play.
In investing, this is the essence of dynamic risk management. A thoughtful investor increases risk when the odds are favourable, and reduces it during high uncertainty or when the reward no longer justifies the risk.
Portfolio theory by Harry Markowitz tells us that maximising expected return isn’t enough – you have to do so in relation to risk.
But in practice, this requires contextual awareness and operational discipline – skills that are anything but easy.
Tennis and investing: discipline is everything
David Foster Wallace – who wrote some of the most definitive pages on tennis and whose work helped inspire this piece – once described the sport as more martial than athletic, more mental than physical. It’s a discipline that rewards patience, precision, and strategy – qualities that matter just as much in the world of investing.
Matches aren’t won with a single shot—just as wealth isn’t built on a single decision. Success lies in staying composed through the long rallies, or the market’s inevitable highs and lows; in adapting to shifting conditions, and making thoughtful, measured choices—one point, or one day, at a time.
As with investing, in the end, it’s winning over the long term that truly counts.
This content is educational, not investment advice. As with all investing, your capital is at risk. Past performance and forecasts are not a reliable indicator of future performance.
*As with all investing, financial instruments involve inherent risks, including loss of capital, market fluctuations and liquidity risk. Past performance is no guarantee of future results. It is important to consider your risk tolerance and investment objectives before proceeding.
