Here’s why Mahendra Singh Dhoni’s career can be a great template for investors
In its latest report, Ambit Capital has shared five things that investors can learn from Dhoni in order to reap maximum gains from their investments.
Although Mahendra Singh Dhoni has retired from international cricket, his aura among cricket lovers has not diminished. Known for his cool demeanour on the field, his stint as skipper of the Indian cricket team saw Indian cricket scale new heights. In its latest report, Ambit Capital has shared five things that investors can learn from Dhoni in order to reap maximum gains from their investments.
A) Those who lead well always stay calm:
Dhoni was named as Captain Cool because he was known to control his emotions on the field. He was also able to handle stress and took decisions with a cool and calm mind.
From investing viewpoint
A calm mind and a clear head allow for well thought out decisions based on logic and reason rather than emotional and reactive decisions triggered by fear and greed.
B) Detail-oriented & flexible:
During the World Cup 2011, when India lost 3 wickets early on, Dhoni who usually comes in at 5th or 6th down decided to change up the batting order. He accounted for the new and existing information and took a call.
From investing viewpoint
In investing too it is important to focus on the details (knowable and important). Account for new information delivered (fundamental or otherwise). A fixed approach does not work every time in investing or in cricket.
C) Identify and invest in to quality, returns will follow:
Dhoni invested time to nurture talent. Few of the bright young stars he nurtured included the likes of Virat Kohli, Suresh Raina, R Ashwin, Ravindra Jadeja, Rohit Sharma and Bhuvneshwar Kumar.
From investing viewpoint
Stock picking follows a similar process of looking for the right business through hard work, research and continuous tracking and involves patiently investing the time to see your investments grow.
If stock picking is done diligently from a choice of quality companies with strong differentiating characteristics, the returns will follow.
D) Hone your skills, build expertise and focus on your circle of competence:
Dhoni was passionate about cricket since childhood and spent every waking hour either playing or improving his game.
He went on to become Captain of the Indian Cricket team in 2007 and won many awards including the Padma Shri and of course went down in history when India bagged the World Cup under his leadership (2011)
From investing viewpoint
As an investor, it is important to identify your circle of competence. It allows you to believe wholeheartedly in your investments, work hard on understanding their “right to win” and to keep your investment arguments razor-sharp allowing you to withstand periods of negative return or low return to win big.
E) Getting the right mix
MS brought in the right mix of players, eased out some senior (older) players and looked for a winning mix rather than a winning player. All the matches that India won under Mahi were won as a
team!
From investing viewpoint
Similarly, the approach that works best while investing is a well-diversified portfolio approach. If you invest all your hard-earned money in a single stock, and if it fails, you will be in trouble.
If you identify 1-2 multi-baggers but lose money in all your remaining stocks too you will be in trouble. It is your overall portfolio returns (team performance) that makes a big difference eventually.