The crickety investor

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Some argue that cricket is one of the most boring sports in the world for the viewer. And cricket’s rules, which are aplenty if complex, are largely skewed towards the batsman, which means that, barring exceptions of a few pieces of fearsome fast bowling or artful spin or athletic fielding displays or controversies, boundary scoring becomes the marker for enjoyment. And then there are the multiple interruptions. Tea breaks, lunch breaks, wicket breaks, pause between overs, pause between balls as field is set, etc. not to speak of the advertisements that pop up at the tiniest of opportunities conceivable, which means that there are too many events simultaneously vying for your attention. So unlike the free flowing nature of football.  However, despite these criticisms, the various passages of play are often a source of life enriching thoughts. Which is why, from Guardian’s Neville Cardus to Cricinfo’s Sambit Bal, we have seen several brilliant articles that not only adorn the game that most Indians have come to adore, but also presented refreshing anecdotes or narratives even for the nonfan. The just concluded World Cup in London also offers a few insights for the stock investor.

Have the cake and eat it too

No one is making the case that England didn’t deserve to win. But their win ought to have come under more satisfactory circumstance, wrote espncricinfo. This echoes the feelings of most viewers who have been through the pulsating and see sawing match. New Zealand didn’t lose the final, didn’t lose the Super Over, but could not lay their hands on the trophy either. With both the 50 overs and the super overs ending up as ties, England was chosen as the winner, having scored more boundaries than New Zealand.

How often does returns from your investment surprise you positively? And how often, in those occasions, have those excess returns come from your most favourite stock, or from a well calculated move? Most often, portfolio returns above benchmark, is a success in itself, and in some trying circumstances, inflation beating returns are laudable too. These should not appear any less satisfying just because, it came from an unexpected stock / sector or asset. Well, wasn’t that the whole point of diversification; ensuring that you don’t go entirely off your investment goals when markets are less rewarding, while leaving room for positive surprises?  One could also think of taking a detour from the oft taken path of diversification via sectoral themes. For example, it pays to have a look at your stocks in terms of its price for its potential for capital gains or corporate action. At times, stocks that have started to rise and are approaching the 50 price mark, sometimes show a propensity to continue moving higher, but at an even faster pace, while stocks which are in the 75-100 price range, may remain lethargic for a while.

The boundary rule, ludicrous as it may sound, has never been used in the World Cup, and had to be dusted off ICC’s rules cabinet, to break the tie, leaving almost all shaking their head. Not because it was any bit less legal, but it was about how expectations changed over the course of the match. What the viewers asked for, was a great match, a tight match if you will, but they got a romantic thriller, enjoyed every bit, and towards the end of it, went one up and re-positioned the expectations by wishing for a fairy tale ending as well. Well, wishing for a particular result is one, but wanting to script the circumstances of the result also leaves the universe to do pretty much nothing, does it?

 Fortune favours the prepared

One: In the final overs, Trent Boult stepped on the boundary line while balancing after having comfortably caught Stokes, thereby not only giving away six precious runs in the dying moments of a low scoring match, but also reprieving Ben Stokes, who would eventually stay on and drag the team total to a tie. And of all people, it had to be Boult who is famous for taking outstanding catches near boundary, and had taken a calm headed catch against West Indies, which helped the Kiwis snatch the victory by a whisker. Two: The four overthrows off Stokes’ bat; when was the last time that happened? And that too, the throw was from Martin Guptil who had ended India’s hopes by running out MS Dhoni with his one stump laser throw. Three: The umpiring mistake that awarded six instead of five for the overthrow, how fateful that extra run turned out to be!

“Being prepared, in investor parlance can refer to a lot of things; being diversified, keeping a capital cushion for new investment opportunities, to be alert enough to respond to unforeseen events etc. But the most essential of it all is to not keep money idle. Asset prices choose their own moments to trend, go sideways, or collapse in the most spectacular ways. So do the announcements of bonuses, dividends etc. that happen at the least expected time. Being prepared, is about finding that ideal level of proximity with the investment avenues and events, that neither overwhelms you with decisions that a financial advisor may be more equipped to, on one end, nor does it put you into a disconnect, on the other extreme.”

But, before tagging England as fortuitous, spare a thought about the English team during the last world cup. Until the start of the four-year cycle leading to this world cup, England were playing old fashioned cricket in One Day Internationals, by filling team with players in the Test mould and expecting them to beat teams that had high performing individuals specifically groomed to excel in the limited overs format. They were sticking on to the “three twos are equal to one six” idea. In England Team Director Andrew Strauss’ own words, it was tantamount to ‘justifying what could not be justified.’ Thus began a transformation, that raised the importance on boundary hitting, and that time would pile up gargantuan amount of runs in various conditions, consistently over the last four years. So, it isn’t quite fortuitous that the world cup was decided on boundaries, is it?

Blink, if you must, but don’t take off your eyes

Such was the expectation that India will reach the top two that apparently 44 percent of world cup finals ticket were sold to Indians even before semis. But, despite being the table topper at the end of nine matches, and winning all but one match until the semi-final, 45 minutes of poor cricket sent the Indian team packing.

“Stopping SIPs at the first sign of a downtrend or liquidating stocks because of an uninspiring budget are all fine, as long as it is that which you have planned for. Behind every sensible decision taken in the face of surprising news flow, be it positive or negative, there is often a long period of gestation period of being invested, and keeping a keen eye for detail or information which seasons you to receive such shocks. That which gives the best stance that will help you take the minimum hit if the news is negative, and maximum benefit if it is positive. The only way to have that comfortable stance in financial markets, is to arrive at the optimal level of investment through planning. That which doesn’t hurt if stock markets roll over and remain dead for some time. That which allows to draw in additional capital when market turns attractive.”

Rohit Sharma, who was collecting centuries for fun till the fateful semi, got out after adding just one run. That one run eventually made him edge ahead of David Warner as the top scorer of the world cup, but his wicket opened doors for the artful Kiwis to prise in. Suddenly 1 wicket for 4 runs become 4 wickets for not much by the end of 10 overs. The enterprising Kiwis shut the door systematically thereafter, despite Jadeja’s “back to the wall fight”, and Dhoni’s “who will blink first” approach. Hindsight tells us a lot of things, including the uncooked middle order, a questionable choice for number 4 etc. but it cannot be argued that the result was due to lack of planning or intent. Or perhaps they peaked a bit early.

Final words

We are here for the money, no doubt; be it cricket or stock market. But at the end of the day, it is often the journey that you reminisce about.

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Chief Market Strategist, Geojit Anand James extensive expertise in financial markets including equities, derivatives and commodities. A Certified Financial Technician (CFTe), Anand James holds an MBA as well as B.Tech degrees. Anand James heads a research team that provides Investment/Trading advice in Equities, Equity derivatives, Index Futures & Options and Currency Derivatives to clients, applying advanced technical and derivative analysis.He provides Technical outlook of Nifty-Sensex Outlook and writes on equity markets in India and market outlook.

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