Taking a leaf out of the Rahul Dravid playbook for investment strategy
Of the many records that Rahul Dravid holds, the maximum number of deliveries faced in Test cricket is the least feted. Dravid faced a mammoth 31,258 deliveries in 164 Tests and he is followed only by Sachin Tendulkar, who faced 29,437 deliveries in a career that spanned eight more years and 36 more Tests. Let that sink in. Take stance, focus, react, repeat, more than 31,000 times. Different venues, different bowlers, different match conditions.
I suspect Dravid would have made a very good investor. In the investing world, there is an old adage, “Evaluate lots of deals, do very few”, and that essentially is a leaf out of the Dravid playbook. For investors, the routine would be: do your homework, evaluate investment opportunities, act (including doing nothing), repeat. Make runs in the process but more importantly, don’t lose your wicket.
Like most things about investing, this is simple but not easy. How do you develop this Dravid-esque ability to evaluate a lot, play a few, make very good runs and not get out? The most important element is technique or investment style. Of being sure who you are, what your strengths are and what you won’t dabble in. This is a combination of an ingrained personality trait and lots of trial and error in your formative investing years. As Ralph Wanger wrote in his book A Zebra In Lion Country, most part of your investing style is inborn. It is only honed and perfected by a series of experiments.
The best way to do this in your initial years is to commit a small amount of capital to an idea, write a rationale explaining why you are investing in it and then monitor how reality pans out, both in terms of fundamentals and stock price, against what you expected. Writing a rationale after one has evaluated an investment opportunity and decided not to participate is also important, for as investors, unlike batsmen, we have the advantage of knowing the counter-factual. Dravid will never know what “could have been” about the many deliveries that he left alone outside the off-stump, but an investor knows what happened to the investment opportunities that they let go and those provide an equally rich learning ground. This is the equivalent of practising in the nets. It’s a sheltered environment where the scoreboard is not ticking and there is ample opportunity to try many different things with little negative consequences. Most institutional investors start as analysts when they are recommending stocks internally and that is an opportune time to polish technique. My advice is: Play lots of shots in the nets and, ideally, have a good coach watching over you. Having done this for enough time and through objective self-assessment, you will develop batting instinct and a pattern will emerge that will define your investing style. I cannot over-emphasize the point that there is no right or wrong investing technique as long as it is sustainable and produces results. Virender Sehwag and Shivnarine Chanderpaul have Test batting averages in the vicinity of 50, with vastly different techniques than Dravid’s.
Broadly, I see two errors with investors who are in the nets. One, there is a tendency to emulate the batsman in the next net who seems to be hitting the big shots. Investors get swayed by the currently ascendant style of investing and try to imitate it, forgetting what their own style is. This may work for a while, but is not sustainable. The other error is being bull-headed when it is clear, especially to the outsider, that your style is not producing results. As Einstein said, doing the same thing over and over again and expecting different results is insanity. Though it is often difficult to see this for oneself, a good coach who can weed out the errors but keep your natural instincts intact, is of immense help in these situations. Like fitness, one is never really perfect with technique. It is ever-evolving and has to be fine-tuned for the playing formats and conditions. This is a thin and difficult line to walk—of being flexible enough to modify as the situation demands and yet have a non-negotiable core technique that is not swayed by what is currently in favour.
The other obstacle to achieving this Dravid-esque feat is that over time, one could just lose the passion for the game.
In an interview with ESPNcricinfo senior editor Sharda Ugra, Dravid himself confessed that he toyed with the idea of hanging up his boots after the 2007 World Cup debacle. Facing up to a battery of fast bowlers in the sticky, grimy heat of Chepauk all afternoon is hard, non-glamorous and often painful. Lots of people opt for the comfort of the commentary box or the dressing room or worse, opt out of the stance, focus, react, repeat drill by throwing their wicket.
Periodically, one must ask oneself whether the prospect of facing more and more deliveries excites you and if the answer isn’t a resounding yes, one should take some time off to honestly figure out if the fatigue is temporary or terminal. Also, not even the greatest investors have a linear smooth sailing in their careers. Sometimes the market regime will not support your style of investing and you will receive a fair share of brickbats. It’s easy to become despondent but those are times that one must work the hardest and not lose faith in one’s style.
Investing in the end really boils down to this. Develop your technique, keep honing it, be brutal about self-assessments and be hungry to face deliveries. If you can successfully play as many investing deliveries as Dravid played cricketing ones, the results will be equally spectacular.
Swanand Kelkar is with Morgan Stanley Investment Management. These are his personal views.
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