May 2019 was an action packed month for India as 2 of India’s 3 biggest obsessions (Politics, Cricket and Bollywood) kept everyone hooked to their television sets and smart phones for latest updates and live action. While election campaign and results kept everyone interested during first half of May, ICC Cricket World Cup which commenced exactly a week after the Lok Sabha Election Results has grabbed a lot of eyeballs over the last month.
Cricket unites Indians better than any religion. As we have made peace with the fact that Cricket is more of a religion than a sport in India and we certainly don’t intend to commit any blasphemy here, how about using Cricket to grow our wealth? No, we aren’t speaking about purchasing a stake in an IPL team. What we can do is draw parallels between various facets of Cricket and Investing to grow our wealth over the long term.
Cricket Teams which have tasted success consistently have been those with players capable of performing in different playing conditions and posses the right team composition so that they are agnostic to uncertainties around coin toss and playing conditions. As an investor, asset allocation of your portfolio is as critical as the securities you choose. Right balance between Equity, Debt and Gold coupled with adequate sectoral diversification is necessary to cushion your portfolio from market shocks.
While having a large talent pool is advantageous, identifying talent and selecting the right players is as critical. Selectors keep an eye for consistent performers with potential to perform in the future. A few good or bad performances don’t drive selection decisions. Likewise, investment decisions should not be driven by recent short term performance but should be based on strong track record and potential to perform in the future.
Unlike other sports, the captain has a huge role to play in Cricket. World Cup winning captains have been strong personalities who led from the front. A captain in cricket needs to have foresight, good temperament, flexibility and patience among other things to marshal his resources well. Likewise, an investor needs to posses these very attributes to grow his wealth over the long term.
A strong start and a consistent scoring rate are necessary to set the tempo for a winning score. A wobbly start to an inning increases the required run rate and leaves a mountain to climb towards the end of a run chase. Likewise, most people turn a blind eye to their investment goals at the beginning of their careers. By the time they realize the criticality of saving and investing, it’s a tad too late. To make up for the lost time, investors end up choosing risky assets without considering their risk appetite, time horizon and end in financial doldrums. The only way to avoid this predicament is to start investing early, invest regularly and stay invested.
Parallels with the world of investing are not limited to cricket alone and can be seen across various aspects of our day to day life. One can use such analogies to adopt mindful investing and create wealth over long term. Next time you watch a cricket match, don’t think merely in terms of runs and wickets but also in terms of equity, debt and wealth.
This article has been written by Ms. Shyamali Basu, Senior Vice President & Head – Products & Marketing, HDFC Asset Management Co. Ltd.
The views expressed are author’s own views and not necessarily those of HDFC Asset Management Company Limited (HDFC AMC). The views are not an investment advice. Investors should obtain their own independent advice before taking a decision to invest in any securities.
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