Crazy about Cricket? Six Investing Lessons from IPL!

If there is something that can compete with Mr. Modi in popularity today, it is definitely the IPL. In a country where cricket is a religion and evokes strong emotions, it will be unfair if we do not learn a few investing lessons from the ongoing IPL season. Here are six lessons that you can learn from this IPL.

Investing Lesson 1: The early bird has a better chance of getting the worm.

As I write this, Sunrisers Hyderabad and Chennai Superkings have qualified

for the playoffs and Delhi Daredevils is definitely not making the playoffs. Five other teams are still battling it out for the two available spots. The only reason why the top two teams are comfortable is because they began well. A few early wins gave these teams a head-start against others and a lot of room for optimizing their teams.
Investing is no different. An early correct start will give you a lot of comfort in achieving your financial goals. Please note it is not only important to start early but more important is to start ‘right’. Do not get trapped into wrong investments as this could be the worst start with a point of no return. Subscribe to this blog to be updated on the correct investments for you.

Investing Lesson 2: Just ‘stars’ would not do

The Bright Stars

If your team consists of AB de Villiers and Virat Kohli performing at their peak, you are bound to succeed. Or are you? Ask any RCB fan and he is bound to be angry or sad! It is not enough if your ‘star’ players play well. Cricket is a team game and needs every member faring well to succeed. A team without these star performers but with every individual contributing with their performances will always fare better. Unless the team fares well, we can only feel bad for Rishab Pant!
Let this not happen to your investment. Your investment usually has a couple of star performers which are generating consistent returns for you but you also have a few non-performers which drags down your overall returns and leaves you wondering about what went wrong. If you have any problems identifying your non-performers, do contact us. We will be happy to eliminate those from your portfolios.

Investing Lesson 3: More important to be effective than attractive

And all fell down

IPL symbolizes flamboyance. It oozes style – whether on the field or off the field. Fancy haircuts and hair colour to paddle scoops and reverse sweeps – it’s got to be stylish. A catch taken without a dive is almost extinct. These acts have also resulted in many dropped catches and many false shots and ultimately the team loses the match. Sunrisers Hyderabad has been the least attractive team this season but also the most effective!

Similarly, in the world of investing, we look for action. Action in the form of regular trading in stocks, unnecessary churning of portfolios and profit booking at illogical times. While all this makes your investing activity more attractive, it eventually ends up being less effective and at the end you realize that you have not achieved your financial goal just because you focused on action. Investing is boring, letting your money grow without disturbing your investments is very boring. If you are looking for glamour, look at page 3 of local supplement of your newspaper.

Investing Lesson 4: Strategies work only if you have enough time

A T20 game is often criticized for being too one dimensional. But it does give captains opportunities to implement strategies and we have witnessed games turning around even if one strategy works for a u cricket. The point is simple – the longer the game, the better your strategies work. A couple of rain affected shortened games this IPL only proves this point further.
Your investment strategies too would work only if you have enough time in your hand. If you are looking to invest for only a year or two, you hardly have any opportunities to make various strategies work for you. If your time-frame is a few weeks or days – God save you! Even your advisor (captain) can do very little without time. Give your investments atleast five years and then see the various strategies work for you.

Investing Lesson 5: Ignore excessive data

Did you know that Umesh Yadav has bowled the maximum dot balls this IPL so far? Did you know that AB de Villiers has hit the longest six? Did you know that Rishab Pant has hit the maximum sixes? Did you know that K L Rahul has hit the fastest fifty? Probably you knew most of these. Do these stats serve any purpose other than answering a trivia quiz? Definitely NO.
The world of investments also throws at you loads of data – thanks to internet and spreadsheets! Most of this data is irrelevant and just adds to the confusion. You need to be smart enough to wade through this ocean of data and hang on to only what is relevant. The skill lies in identifying what is relevant and this skill can only be acquired with increased reading and experience.

Investing Lesson 6: Factor in the uncontrollable

There are a lot of factors not in your hands while you are playing the game. Every team today already prepares for factors such as toss and weather which are not under their control. Something out of the blue might still strike the team – like getting to know that your major performing player Jos Butler would not be available to play for you when you needed him the most. There is nothing much Rajasthan Royals can do at this point except look for immediate replacement and pray that he performs well.
Even your investments are impacted by a lot of unforeseen factors. It could be as simple as an unforeseen, unplanned, untoward incident occurring in your life that has resulted in increased financial outflows. Your entire plan goes for a toss. While there is not much you can do at this stage, you can surely mitigate these risks through proper financial planning and thorough diversification.

The SUPER LESSON

While we have not witnessed a super over in this season of IPL yet, here is a super lesson to top up on the previous six.

Pick Dream 11 or 11 Dreamers?

IPL also brings out the managers in fans with fantasy leagues and dream 11 taking up more time than Facebook and Tinder! Just want to leave you with this thought – would you be better with your dream 11 team or would you perform better if you had chosen 11 dream teams? This is where you need to know the importance of diversification and the risks associated with under and over diversification. Will cover this topic in detail in subsequent blogs. Until then, Happy (L)earning!

Images from www.iplt20.com

Posted by Alok Chhajer

8 comments

jeyachandran s

Hai
Really excellent. I am forwarding this interesting article to my financial advisors. In fact I am in mutual fund industry for more than three decades. I was also a motivator taking training sessions to agents. Your article will help my friends to make the session interesting.
My appreciations for the interesting article.
Regards

Alok Chhajer

Thank you Jeyachandran sir! Your words mean a lot!

Sir you have hit this one out of the park. I loved your concept of explaining investment tricks through cricket. A cricket crazy nation like us totally deserves it. I have thoroughly enjoyed going through this article. You have been doing a fabulous job. I wish you all the best. I always look forward to read gem’s like this.

Alok Chhajer

Thank you Ashish. Your craze was definitely one of the inputs that made me write this blog. Do share it with your other cricket crazy friends.

That just made my day ???? I will definitely send it across to my cricket crazy friends????????

Alok Chhajer

You really seem excited. To add to your excitement, how about a free financial plan creation to any of your friends who comment here with your name?

Jatin Shah

Amazing analogy of Cricket and investment. honestly a very well written article by an amazingly learned person who understands the best of equities and Mutual funds.
Reality of investment is to score singles from the first ball, and keep the score board ticking.. when you a get a loose ball go for 6’s and 4’s. …but remember to keep the score board ticking.
Content is amazing and worth a read. All the best for this blog and investment services.

Alok Chhajer

Thank you Jatin! You hit the nail on the head with ‘keep the scoreboard ticking’!!

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