If there is one sport that can bring our nation to a standstill than it has to be cricket. In fact it’s like a religion for some fanatic followers of this game. And where there is a market, commercialism soon follows suit. Thus came about the idea of an Indian Premier League to encash on the frenzy for the sport. Every year eight odd teams owned by various private enterprises fight it out to win this cash rich league, where the cost of a player could sometimes cost more than the combined prize money of all the other sports played in the country. As a financial columnist I chose to pick some essential learning from this league that could benefit investors.
Tough Squadron:
The success of a franchise playing in the league is mainly dependent on the composition of the team itself. ie it has to have the essential balance between batsmen, bowlers and all-rounder’s. Likewise a successful investor has to have a balanced portfolio of assets. I often come across investors who have invested only in FD’s or only in shares or even in gold for that matter. It’s not wrong to invest in either of the above, but the problem is over allocation in one at the expense of the other. The best way forward is to allocate your investment in such a way that you average out your target returns by spreading the basket of avenues to invest in. If you are overly dependent only a particular asset for investment, chances are you could be in for a bitter surprise if the throw of dice doesn’t fall your way.
Winning blueprint:
The match begins even before the teams enter the field, what I am hinting towards is that the strategy for every game is drawn in the dressing room well in advance, based on the opponents, the pitch and weather conditions, and even the size of the ground for that matter. There is always a plan B or C in-case the first one doesn’t work. It works pretty much the same when it comes to investments. You need to think, plan and invest. And when it comes to investment success, you need to improvise by charting out a unique way to invest. For example as of last year, investments in mutual funds in India formed just close to 3 per cent of the total investment by individual investors in financial assets. Whereas the average post tax returns from both debt as well as equity based mutual funds were greater than the post-tax returns from conventional investments such as the FD’s thus emphasising the fact that it pays to be unique. So what we can learn from here is that when you have a unique strategy the probability of winning increases. Make sure to have a backup plan as well because of the dynamic market conditions.
Be Patient:
Sometimes the best of teams even with well-planned strategies fail to win matches initially simply because some players take time to adjust to the conditions and to understand ones role in the team. But in a tournament such as this with a total of 60 matches in aggregate being played there is plenty of time to bounce back and win the cup. The key here is to remain patient and not take your eyes off the target. The learning here is that patience and perseverance are necessary traits of a good investor. In the short run you may not always achieve the results you desire, but in the long term you are more likely to make profits if you stick to your fundamentals. After all Patience is not the ability to wait, but the ability to keep a good attitude while waiting.
