Monday, May 22, 2006

Rahul Dravid style of investing


Kuppusamy Chellamuthu

Rahul Dravid, the captain of Indian cricket team is a dream hero, not just for some pretty girls. He is a hero for various people ranging from observers, fans, aspiring young player, team mates etc.. When we partied at a friend’s home, there was an opportunity to meet a person who is a bank employee. He remembered his days when he played together with Rahul for India cements.

“Dravid is still the same. He won’t engage in any kind of rubbish talks especially on matters involving other players on matters other than cricket. Pretty confined and composed person he was with focus on the game every minute. His dedication stood him out among others. I am confident these are the qualities that took him this high in his career”

How true? I was exhilarated hearing this banking officer talk about the captain.

Note: I have allocated one full chapter Rahul Dravid investment style in my stock market book 'The Science of Stock Market Investment - Practical Guide to Intelligent Investors'

In him, we can not see the kind of aggression, excitement, attack seen with Sehwag and Dhoni. Does that mean that he is no important that the rest? Certainly not. As a matter of fact, Dravid is the key player and stands out to be a pillar of the team. He is very very successful player for ages with his consistency & perseverance. His strength is to tire the bowlers till they get weak while keeping him at the same sound position.

Benjamin Graham presented a simple investment plan with the help of baseball game. As I could not understand the game of baseball to the extend the investing game was understood and also our immense proximity to cricket, I developed a conviction that the same plan could be based on Dravid’s style of batting. As investors we have a lot to lean from Dravid.

Unlike test cricket, the game of investing is played for life time. Every stock quote is like a delivery bowled outside the off stump. Unless we go & hit the ball, the ball does not warrant us to hit it.

When the bowler gets tired or when an out of form bowler comes in to attack, you can expect loose deliveries. These are the times for which Rahul conserves his energy for. A 4 or 6 is in the offering. Here we have an edge over Dravid in the sense that he can only get a maximum of 6 runs in a ball. But in the market we can even go for & hit with crores & crores of money. Then… sit back & relax till next loose delivery is bowled no matter how many overs later.

We do not loose the wicket for not having played a ball or some overs at a stretch. Bowler keeps on bowling even when we don’t want to bat. Fine.. there are no stumps in BSE & NSE. The only way we get out is to play some bad shot and been ‘caught out’.

Some times we might have exercised inaction on some plump deliveries which should have been put away with ease in great style. That is ok.. we did not loose anything; it is only that we missed an earning opportunity. Having missed such a ball should not force us to go after the next delivery madly even if it is a yorker.

Very easy it is to play like Dravid. He is not expected to score runs of every delivery like Dhoni. Almost all mutual fund managers do not have that freedom to imitate Rahul, simply because they are compared with other player over after over, if not ball after ball. They are horses. Their fans and people bet on them always want these horses to perform tirelessly.

Hence there is no pressure from outside to be like Dravid for an individual investor like you and I. That does not let us be free from pressure, the pressure from inside. Not able to keep the money for some good investment opportunity might force to take any horse that came out first last hour. Yes.. pressure is purely internal and it is highly difficult to control emotions. Your girlfriend’s aunt made few thousand bucks in day trading does not have anything with you to trade. Even Harbajan can hit some ball to the fence. Does that mean that Dravid should imitate him?? Our worst enemy is nowhere but inside us.

It is equally bad to defend crazily easy deliveries. Do not even try for single or two, but got for the maximum, provide you know it is the ball that matches your line & length requirements. Some times full toss loose deliveries are for you to take. You are insane if you do not leverage (margin purchase or derivatives or whatever) with such investment opportunities. They occur once in a green-moon.

You may not know the delivery that could cost your wicket. That is not a problem. It is fair enough to know the delivery with which you can add up your score. Knowing what you know and playing the game according to your strengths is seldom practiced by investors. Are you one among them?

Any bad pitch in bad weather condition could yield you at least 5 deliveries to score in a 5 day test match. That is all what we need. Any bad economic condition in the worst of recession could provide you at least 5 investment options in a year. What else do we need?

Even for Dravid, sometimes it is not irrational to go for unconventional shots like reverse sweep. He might probably know there is no fielder and also probability of getting out is nil. Derivatives instruments are similar to that. They are to be played at the surest of the deliveries.

“Investors, please do not deal with derivatives and day trading each day. Know what? I don’t play reverse sweep at every delivery” says Dravid. Do we listen?

3 comments:

Balaji said...

வணக்கம் சார்,

உங்களுடைய கட்டுரைகளை நான் நாணயம் விகடனில் படிப்பேன். இந்த கட்டுரை என்னை மிகவும் கவர்ந்தது.

மிக்க நன்றி....

SHV said...

very true..

SHV said...

very true