M S Dhoni and Investment Philosophy

So India was kicked out of the Twenty 20 World Cup, and a billion fans are crying about it. Correct? Let us see what we can learn from here:

1. In the T-20 format, it is far more difficult to predict than in other forms. Just as how no fund manager knew at 21000 sensex that the market can come down to 9000. Even those who claim that they could predict that, could never have predict that from 8700 market will move up 80% in such a short time.

2. MS Dhoni in 2007 was playing to win. In the year 2009 he was playing NOT TO LOSE. This made him very defensive – and he can now in retrospect say ‘3 runs’ is a small margin. Actually given the limitation of the ‘top’ batsmen – who could not play the rising ball in England – with Bravo the bowler (Oops with Holding and Marshall these guys would not be in the West Indies 40, leave alone 11!), best bowlers like RP and Praveen Kumar not in the team, it was a strategy for disaster. Anil Kumble, Ravi Shastri, Sachin were all available in England – Dhoni and Kirsten simple goofed. It also requires a great coach to seperate the batsman, captain and wicketkeeper – do not think that was visible at all. Strategic mistakes like too many funds, choosing sectoral funds, paying Income tax on equity funds (by choosing a balance fund with 50% equity), Not doing a SIP, not taking adequate life insurance, etc. are strategic mistakes by investors which hurt them in the long run.

3. Rewarding Mistakes: Most actions are judged on outcomes, not on efforts. This is a good from the markets’ point of view. However when Joginder singh was given the ball to bowl the last over there was no logic, but the result was stunning. So we called Dhoni a strategist. Now selecting Jadeja resulted in a loss. So we call him a failure. Fund managers who sat on cash from 21000 to 10000 looked smart. We called their performance as a ‘1st Quartile performance’. However, when they sat on cash at 8700 index waiting for the Index to go to 6500, they lost out. So in the media the same heroes look like zeros!

4. Favorites can be a drag: Afraid that his bowling RP Singh will be met by ‘Dhoni uses his favorites’ he underbowled RP and bowled Ishant. RP gave 13 runs in 3 overs, Ishant gave 38 in 4 overs. Bhaji gave enough wides and extra runs. We lost by 3 runs.Most retail investors struggle about which fund to keep and which to remove. Ths very simple thing to do is choose one fund and monitor progress. Also the need to transact is so high for the retail investor, that it hurts. Main causes of India’s failure – Overconfidence, Too many changes in the team, and playing defensive cricket hurt you even while investing. Overconfidence – my techniques of last year will work this year, Too many transactions, and keeping all your money in ppf for 20 years – all hurt, and hurt bad.

5. Even if you are a good tree cutter you need to take time to sharpen the axe. If you do not take time to think, rest, relax the muscles etc. how will you recover to play again? We over did our playing – maybe we did not pay attention to other parts of the game. What was the reason that we had a jaded team? Not sure. Many mutual funds tend to relax and rest on their past laurels. Look at their recent performance – it is really jaded! No names please!

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One Response to “M S Dhoni and Investment Philosophy”

  1. Maybe you would like to add one more…FOCUS on your GOALS….you win some..you lose some, doesn’t matter…avoid euphoria and/or don’t indulge in self-pity….ignore those advisors (whether they sell MFs or Insurance or write syndicated columns after having retired from the game) for whom hindsight is the ivory tower from which they chose to sermonize…but stick to your goals….be it the money you have to save…or the asset allocation you have to stick to…no matter how ‘sexy’ the NFO may look (or the navy-blue suited private banker in question! LOL)….dream about your goals, live your goals and score them too!
    Show me one guy who has done this and still not had the last laugh….be it MSD or Warren Buffet!

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