A portfolio that chases the leaderboard is, in effect, fighting the last war, Nick Stewart writes.
Nick Stewart is a financial adviser and CEO at Stewart Group
On the wall outside one of our meeting rooms in Hawke’s Bay hangs a faded Italian flag, framed and protected.
A New Zealand soldier took it from the car of an Italian officer who surrendered to him in North Africa, and carried it home. It came to me through Trade Me. The seller, the soldier’s daughter, was looking for someone who would understand. Her family, she explained, had no particular interest in it. Behind the frame sits our correspondence and a record of her father’s service through the desert. Each time I walk past it, I reflect on him, and on the thousands who didn’t come home.
This Saturday falls within the anniversary of the Second Battle of El Alamein, which began on October 23, 1942.
It was the turning point of the war in North Africa. The 2nd New Zealand Division, under Bernard Freyberg, was at the heart of it. By the time the campaign ended in Tunisia in May 1943, almost 14,000 New Zealanders had been killed, wounded or taken prisoner. Three Kiwis (Charles Upham, Keith Elliott and Te Moananui-a-Kiwa Ngārimu) were awarded the Victoria Cross.
What strikes me about that campaign is how unglamorous and, in the broader public memory, how forgotten it has become. The dramatic moments of the war are the ones we still tell stories about: the Battle of Britain, the Dam Busters, the great set-piece victories. North Africa was something else, a grinding desert war of supply lines, attrition and discipline, what the historian Saul David, in his recent book Tunisgrad, has called the North African Stalingrad.
It was won not by single moments of brilliance but by thousands of ordinary soldiers showing up day after day in conditions designed to break them. The heroism of an Upham was extraordinary precisely because it sat within a broader effort that was, by design, methodical and collective.
My uncle’s father, Mick, drove trucks through that campaign on long-haul supply runs across hundreds of kilometres of empty desert, the same featureless terrain stretching away to left and right. He told of vehicles ahead and behind that simply vanished, were lost, misdirected or captured after drivers unwittingly wandered into enemy lines. Even Lieutenant-General Richard O’Connor (one of Britain’s most capable early-war commanders, the architect of Operation Compass) was lost this way. In April 1941, his unescorted staff car ran into a German patrol at night. He spent more than two years as a prisoner of war. The desert was unforgiving to the careless.
That, I think, is why the flag matters to me beyond its personal history. It is a memento of a campaign that succeeded through what we might call diversification of effort, of role, of risk. Every Mick mattered. Every supply truck mattered. The headlines went to the Victoria Cross winners. The campaign was won by the rank and file.
I can’t help but see the parallel with how we approach capital.
In 2025, the standout asset class was emerging markets. The previous year it was something else; in 2027 it may be something else again. Investors (and I include a fair share of advisers in this) spend extraordinary energy trying to identify the winners ahead of time. The financial press feeds the appetite. Portfolios get reshaped around whatever was last quarter’s standout, and the boring holdings that quietly do their job get treated as dead weight.
This is a mistake. Winners are hard to find in advance. Winners are not consistent. Persistence studies of fund returns repeatedly find that past winners rarely stay on top. A portfolio that chases the leaderboard is, in effect, fighting the last war.
A well-engineered portfolio looks rather more like the El Alamein order of battle than a Victoria Cross citation. It contains assets that, individually, may never make headlines (international bonds, defensive equities, infrastructure, cash) but which, together, hold the line when conditions turn. Diversification is the discipline of accepting, in advance, that you cannot pick the winner every time, and structuring accordingly. Each holding has a job to do.
The investors I’ve seen do well over decades are not the ones who called emerging markets right in 2025 or technology in 2020. They are the ones who held a sensible mix, rebalanced when they had to, and resisted the urge to chase. Their portfolios looked, frankly, a little boring. That was precisely the point. Their wealth compounded quietly while flashier portfolios round-tripped through booms and busts.
History repeats because human nature does. The temptation to swap a steady asset for something flashier is the same temptation that, in another context, has had armies storming hills they should have flanked. Discipline wins campaigns. Discipline builds wealth.
This weekend, as I reflect on the anniversary, I’ll think about the soldier who carried that flag home, and the thousands who didn’t. I’ll think about what they understood about the value of showing up, doing the work, and trusting the plan, even when no single day looked decisive.
That is how campaigns are won. It is also, in its quieter way, how families build fiscal wellbeing across generations. The lesson is older than markets. We forget it at our cost.
Lest we forget.