The IPL 2018 season has ended with Chennai Super Kings being the champion. It had all the elements of a thriller to start with, but then towards the end, it tapered to a one-sided finish. Investing is all about being able to reach the milestones and goals over the lifetime, when you need to achieve. And do you as an investor have the patience for the long-run?
Even though T-20 is slam-bang cricket, this patience was noticed when Shane Watson was batting. The ball was swinging and Bhuvi, the bowler, was in fine form. Watson played his entire six balls without a run. His first scoring shot was in the 11th ball. And remember this is T-20 cricket. One has to bide the time, respect the conditions, the bowler and wait for the opportunity to strike. And this was in perfect exhibition in the finals. To fast forward, by the 51st delivery he had raced to his hundred, a century in the next 40 balls.
How To Relate This To Investing?
When the ball was swinging early on, Watson did not try too many things. He bided his time. As an investor, when the markets are volatile, can you stay on the sidelines and sit on cash and wait for the opportunity to invest aggressively? Sitting on cash also means you have parked the funds in liquid mutual funds so that you can earn a return higher than bank deposit interest rate. In cricketing terms, it would mean, running singles and rotating the strike.
Today, when the price of oil is creeping higher, the bond markets being very volatile, the international markets having strong headwinds, what is the approach? And with the plethora of information where the news flow continues unabated, it is difficult to identify and separate information relevance.
Is Too Much Of News Flow A Bane?
Well, too much of everything is a bane. What is important is that as an investor, you should be able to identify your goals, milestones and the time horizon to achieve the same. Being watchful in investing does not mean that you are procrastinating. It is definitely procrastinating if you do not have the strategy and the game plan to execute and let lie the money lying idle in a savings bank.
Watson had a strategy in place when he was biding his time. Opened up with two fours and then as the ball stopped swinging, he unleashed his entire range of strokes. More importantly, he was confident about himself and the strokes he was hitting with full authority.
Tracking Green Shoots
In investing terms, what it means is that as you see the green shoots in the economy, you slowly increase the allocation to equity and as more evidence about improved market situation is noticed, you invest the money lying in cash/liquid mutual funds and revisit your asset allocation with confidence.
In investing, what is missed by the majority of the investors, is when you need to take the call to revisit the asset allocation, you need to have the confidence and belief and not take half measures. Listen to one or two people whom you trust or your financial advisor and follow and execute the plan.
This could also help you reach the goals and milestones, earlier too. This was noticed in the 2018 IPL finals too when the target was reached in a canter after a watchful start. This is where the bucket strategy of investing based on time horizon, liquidity needs and concentrated asset allocation works.
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