With IPL 2016 in the offing, there’s nothing that’s not about Cricket anymore. Surprisingly, we even discovered a number of commonalities that exist between the game that captures the heartbeat of our nation and the markets that control its money! Here we draw a comparison between the Types of Investors and Types of Cricket Fans you may come across in India:
This fan believes that strength wins battles. He wants nothing more than to see his team assume a destructive batting and bowling strategy that puts the opposing team on the defensive and scares them into submission! Investors with such an approach are comfortable with taking a high degree of risk,because they know that’s where the high returns are. They have the tenacity to withstand fluctuations in the market and don’t lose faith easily.
This fan is all about the research. He’s smart enough to analyse pitch conditions and the strength of the opposition before placing a bet or buying tickets. These fans make it a point to educate themselves about the various intricacies of the sport and base all their decisions on past trends and research. It is easy to spot a clear parallel here, with the informed investor who times every move to perfection, often hitting the bulls’ eye. This is the guy who seldom loses an opportunity to cash in because he’s found a formula that works.
This fan would rather have the team “score in singles” or “bowl line and length” than go hammer and tongs and take the game by the scruff of the neck.This fan probably doesn’t taste victory too often, and is probably even late to the after-party. It is in this category that about 85% of India’s investor population reside – the country’s cautiouscluster of investors who wait too long to invest for fear that they “aren’t earning enough”! Safety first is their motto and risk-aversion, their middle name.The problem is that being too conservative at times could lead to conservative returns as well. A good investor knows when to take that extra element of risk for a potential gain.
4. Over Excited:
T20 cricket has heralded a new wave of playing Cricket, with quick runs being the order of the day.This fan is impatient, addicted to big hits and always on the lookout for fireworks. Little imagination is required to draw a parallel with the short term investor, who’s hungry for quick gains and in the play for short time periods. The problem with both is that they fail to recognize that all good things take time- be it a cricket win or a huge investment pay-out.
Much to the surprise of fanatics, there are those among us who don’t have the ardent desire to watch every single game of the season- maybe just their home tea, or a specific tournament. Their situation is not too dissimilar to trigger-based or event-based investors, who indulge themselves only when they feel the markets are performing to their expectations, forgetting that the golden rule of investing is to do it constantly, even if it’s just a certain part of your monthly income put into an SIP Mutual Fund.
Just as every yin has its yang, so must the T20 game. Test cricket, a game for purists, is characterized by the one word that today’s millennials seem to have forgotten – patience. This is the hallmark of the long term market participant who is more concerned with ear marking funds for important future events. Every investor needs to take a page out of the patient investor’s book and understand that investments needs time to make you rich!
7. Know it all:
This is the guy who claims to have insider information about everything. He seems to be able to predict the outcome of the match before it’s been played, and always has an excuse for the times he’s wrong. Similarly, there’s always the investor who says he “knows the markets” and “understands money” and makes the rest of us feel foolish. These guys may not make the best company, but they probably make the most money, so we let them stick around.
Thus, as is evident from the above, the types of investors are not much different from the diverse range of cricket fans – both activities being games of adventure and prudence, characterized by participants who follow similar approaches to very different things!
"Knowing yourself is the beginning of all wisdom"- Aristotle -
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