IPL Match of Investment

 

Dr. Virendra Tatake

Since the start of the 15th season of the IPL, the atmosphere has been energetic everywhere. If we observe the IPL matches of this season, we can see that the team that combines the speed of the score and the number of wickets in hand is the one that is succeeding. From a slightly different point of view, there are a lot of similarities between IPL matches and financial investment. Some basic rules of investing can also be learned from these IPL matches. By following these rules of investment, we can master the technique of the game and can win the 'trophy of ROI '. Here are some common points between IPL and investment which will be useful for an investor .

1) The basic rules are the same.

Although the nature of cricket matches is different from investment , the basic rules do not change. No matter how many new investment options are available, the basic rules remain same. In addition, to be successful in both these places, you need to have some commonalities. For example, the need of deep of study ,practice , consistency, perseverance and confidence are required for both the investor and the IPL player . If we ignore it, path to success becomes difficult.

2) Strategy.

Just as a cricket Test match, an ODI match and a 20-over IPL match have different strategies, investors need to plan differently for long-term and short-term investments. The strategy of a Test match is not useful in a Twenty20 match and vice versa . Similarly , one investment strategy will not work for another. The player needs to know exactly what form of match you are in. There is no guarantee that a player who succeeds in a Test match will succeed in an IPL match. Similarly, a long-term investment strategy cannot guarantee returns in short-term .

3) Not taking any risk is the biggest risk.

In an IPL match, while chasing the runs of the opposing team , keeping wickets in hand is not sufficient but maintaining required run rate is also equally important . Only by saving wickets and focusing on defensive play , the result can be losing the game . Similarly, adopting a risk-free investment strategy does not yield enough returns to beat the inflation and lowers the market value of such investments in the long run.

4) Balanced approach.

Just as every team in the IPL has a proper balance of batsmen, bowlers and fielders, so too should an investor captain balance his options when choosing a team for his investment. In technical terms it is called as "asset allocation" . If it is done properly, the chances of winning an investment

match increase. Therefore, your team needs proper coordination and balance of different investment options.

5) Each match should be considered differently.

The feature of IPL matches is that every match is different , every day is different. The performance of some players improves with each passing day. Therefore, the losing team in the previous match can be the winner in the next match. Even in an investment match, don't expect every investment option to give you a good return every time. Instead, the investor becomes more successful as he understands the nature of each investment option and expects the fair return from it.

Lets play a safe and successful match of investment .

(The author is an investment scholar and is associated with Indira Global Business School as Director )