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Investment Lessons to Learn from Cricket

A fun, cricket-based guide to investing

If investing were like cricket, would you be a T20 player, an ODI star or a Test match champion?

Shortly, India kick off their tour of Australia with the first of a 3-match T20 series. The T20 series will be followed by four Tests and three ODIs. It promises to be an exciting contest, right?

Yes, but what has cricket got to do with the stock markets and investing?

Just as cricket has a place for all kinds of players, the stock market too offers investors with different skills and mindsets an opportunity to create wealth. But it is important for you to understand your risk appetite and objectives before investing your hard-earned money. You don’t want to be playing T20-style cricket in a Test match, do you?  Or vice-versa.

So, take our fun quiz to find out what format of cricket your investing style is closest to! Let’s go

1.What kind of stocks do you invest in?
    a.I prefer highly liquid stocks that have a lot of price action every day
    b.I prefer trending stocks that have sustainable momentum
    c.I prefer fundamentally good stocks that can deliver long-term value

2.The markets are extremely volatile. How do you react?
    a.Volatility is both an opportunity and a risk. I take my chances
    b.I play the waiting game. Tread with caution till the volatility settles down. Then go all in
    c.It doesn’t bother me. I take short-term volatility in my stride because my long-term view is intact

3.How often do you check the performance of your stocks?
    a.Several times a day
    b.Depends on how the market is moving. Sometimes, every day. Other times, every few days
    c.I rarely check my portfolio. Maybe once in a month

4.You receive a substantial bonus from your office…
    a.You immediately think about increasing your margins
    b.You ask your broker for recommendations on stocks to invest in
    c.You put it in a liquid fund and then STP it into a large cap equity fund

5.Stock you just bought shows a substantial uptick, you…
    a.Sell it before market closes
    b.You wait for the trend to play out or sell it only after it meets your target
    c.You ignore the price action. You don’t plan to sell it for years to come

6.You buy and sell stocks based on…
    a.A mix of news, sentiment and technical analysis
    b.A combination of technical analysis and fundamental research
    c.Solid fundamental research and company understanding

To find out, what your style of investing is in cricketing terms, score yourself according to the rules below:

If you answered mostly as, you are T20-type player. You like fast-paced action and want immediate results. You are most likely a day trader and are willing to take a few risks to maximize your returns.

If you answered mostly Bs, you are a one-day star. If things aren’t going your way, you are willing to show patience to ride out the tough times. You likely have a short- to medium-term outlook and are prepared to bide time till things turn your way.

If you answered mostly Cs, you are a Test champ. Not for you the adrenalin rush of daily ups and downs. You will prepare well, and then grind it out through all kinds of market volatility. You are a long-term investor and have enormous patience and grit. You either pick fundamentally good large- or mid-caps or take the SIP route to wealth creation.

Happy investing!