SavvyGrowthPaths

I was born in India in the 80s, so cricket has always been close to my heart. Like many, I grew up idolizing Sachin Tendulkar, praying he would stay on the pitch longer than anyone else. If Sachin got out, it often felt like India’s chances of winning were fading. He was a model of consistency, reflected in his impressive batting average in both ODIs and Test matches.

Today, with the rise of T20 cricket, we see a shift in focus from batting average to strike rate. In the fast-paced world of T20, where only 20 overs are played, batsmen need to score quickly, aiming for boundaries to keep the game exciting and intense. This brings constant action, with frequent sixes, fours, or wickets.

In many ways, investing is similar to cricket, with two types of players: speculators and investors. Speculators are like T20 batsmen, constantly looking for quick wins. They bet on momentum, seeking fast returns through frequent buying and selling, with results in a day or two.

Investors, on the other hand, are like players focused on batting average. They analyze businesses from both quantitative and qualitative perspectives, carefully calculating the intrinsic value and seeking to buy only when they find a discount. This approach takes time, effort, and patience; it may take a year or two to find just a few good investments. In investing, as in cricket, compounding wealth is best achieved by focusing on consistency rather than quick wins.

If we focus too much on “strike rate” (speculation), we risk frequent losses. Like in cricket, maintaining both a high strike rate and high batting average is challenging. The best approach is to focus on our “batting average,” emphasizing long-term investments that compound over time. In other words, be an investor and focus on the fundamentals of businesses.

Happy Investing!