The fast bowling legend Merv Hughes made a casual prediction 20 years back in the Australian dressing room in Perth. This is what he told his captain Allan Border after the Australians failed to get an “18-year old kid” out after trying for an entire day – “This little prick is going to get more runs than you, AB.”
The rest, as they say, is history.
Today, that “little prick”, also known as Sachin Tendulkar, is past his 40…and is celebrated as the God of Cricket (if not the Godzilla!).
The day Hughes made the above prediction, Sachin had just hit his third century in international cricket. Today, he has crossed the 100 centuries milestone…and has the hunger to take the count even higher.
I have been a great admirer of Sachin all these years. And now, when the “experts” are behind his back asking him to retire given his string of recent poor performances, I admire him for the turning the noise off on the critics.
“My critics haven’t taught me my cricket,” rebuts Sachin.
“I still get goosebumps as I stand with my teammates when the national anthem is on,” he says. “I still feel the same passion when I pick up my bat and go out.”
Cricket and investing
The game of cricket has great similarities with investing money.
- Like a fast bowler, Mr. Market throws a ball at you every day. It’s upon you to let it pass or use it as an opportunity to score a run.
- You will get beaten sometimes, even if you are the best batsman.
- You will make mistakes, but those are the steps to learning.
- The opposition – traders and speculators – will sledge at you sometimes, but you need to ignore them instead of reacting.
- Patience pays big time.
- You need to work hard on the process – learning to play the yorkers and bouncers like any other delivery – and the outcome will be fine.
The list doesn’t end here. But then, that’s not the big idea of today’s post.
The big idea is the great life lessons that an investor can learn from Sachin. And here are eight of them.
If you are a new, young investor, read what follows very carefully.
1. Brave the dangers, but start young
Sachin faced his first ball in international cricket when he was just 16, and it was from none other than the super-speedster Waqar Younis.
This is what the legendary Javed Miandad had to say of that first ball – “It was a very pacy delivery from Waqar and this young fellow came on the front foot to drive the ball. It was confidence personified. We all knew we would be hearing a lot about this youngster in years to come.”
Most people fail to start investing early for the simple reason that they fear starting out.
They fear making mistakes and losing their savings. “Investing is risky” is a common complaint.
The fact is that investing isn’t risky. Not starting early is, for you lose the precious years to start compounding your money.
2. Making mistakes is fine
During the Australian tour of India in 1998, Matthew Hayden said, “I have seen God. He bats at no. 4 in India in Tests.”
To this, Tendulkar replied, “I am not God of cricket. I make mistakes, God doesn’t.”
In investing, which is a game of decision making, making mistakes is fine till you don’t repeat them. But if you start with the expectation to get perfect results and without any mistakes, you lay the ground for great disappointments.
Remember what someone famously said, “There are no mistakes, only lessons.”
So, while your aim must be to minimize mistakes that can permanently lose you capital, don’t aim for perfection. It is overrated!
Don’t fret over the mistakes made – sell a stock at a loss if you realize you made a mistake in buying it, and don’t buy a stock just because it moves up and you think you made a mistake in not buying it earlier.
3. Always be a student
“As a batsman, he has the technique, hunger, and desire for runs,” says Rahul Dravid of Sachin.
Despite having all the records to his name, and after being consistently great for the last two decades, Sachin is still a student of the game.
From learning the paddle sweep and wristy flair from Mohd. Azharuddin in the 1990s, to taking T20 lessons from Jayasuriya and Sehwag, Sachin is a learning machine.
In investing, the most powerful investment is the one you spend on yourself. As Charlie Munger says of Warren Buffett – “Berkshire’s record would have been terrible if Warren didn’t keep learning.”
These guys are crazy about going to bed slightly smarter than when they woke up. Why should it be any different for you and me?
That’s why it’s so important to read. Be a sponge, and everything will soak in like a lesson.
Stock market is a great humbling ground that brings down those who think they have mastered the art of investing.
One also needs to learn from other’s mistakes because as Charlie Munger so often says, “You don’t need to pee on an electric fence to know not to do it.”
Like Sachin, never let that young boy (or girl) within you die.
Be humble, remain a student, ask questions, and learn new things.
4. Know what to avoid
In my years of watching Sachin play, I have rarely seen him playing rash shots. Unlike someone like Sehwag who has got himself out so many times thanks to playing without thinking, Sachin has known clearly the balls he must avoid playing.
Charlie Munger says, “A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage etc.”
In investing as well, if you can create your circle of incompetence and don’t move out of it, you will do a great deed for your money.
Avoid buying businesses you don’t understand. Avoid buying stocks before knowing the risks involved. Avoid borrowing money to buy stocks, however great the opportunity is. Avoid bright, shiny stocks that everyone else is buying.
5. Discipline & adaptability
The awesome straight drives and drives between the fielders don’t separate Sachin from other great batsmen. What’s special however is doing this consistently for over 20 years, and it tells you a lot about his discipline.
“His biggest strength as a batsman is his adaptability,” says Saurav Ganguly. “And that is something really, really amazing, something so special.”
As an investor, there is no doubt that you must have a sound investment philosophy. What’s more important is to stock to it with utmost discipline.
Now, discipline in investing does not mean rigidness. You need to adapt to changing times and situations.
If your philosophy says that you will not touch businesses that have even a single rupee of debt on their balance sheets, and you find that you are missing a lot of great businesses who have some debt, it pays to tweak your philosophy a bit.
But be disciplined in what you have set out to achieve, and how you have set out to achieve it.
6. Form is temporary, class is permanent
A lot of critics have been (indirectly) asking Sachin to retire given his recent poor performances. This is how Sachin replies, “Success is a process and during that journey sometimes there are stones thrown at you and you convert them into milestones. It’s a great feeling.”
It’s the same investing. You must take mistakes and short-term underperformances in your stride, and stick to your long term investment philosophy.
Seeing stocks in your portfolio in losses should not lead you to question your abilities. Of course, you must review your past investments (and the underlying businesses) from time to time, the idea is to keep the belief in your abilities.
Remember, you alone are the most capable person to manage your own money.
7. Leave a trail
Here is what the bowling legend Kapil Dev has to say on Sachin, “The way he has taken on the role of India’s greatest sporting ambassador – he has, among other things, inspired a generation and more to play cricket.”
As an investor, it’s good to be an inspiration for the younger generation who will follow your path in managing money simply and sensibly.
This is true when it comes to passing on money skills to children. You can’t teach them stuff. You must show them how to do it.
Set the precedent.
How many times have you seen this image on the right? I have seen this at least 200 times over the past 20 years.
In investing, after you’ve done your analysis of the business, calculated its intrinsic value, and before you buy the stock, pray.
Pray before you buy the stock, and pray after you buy it.
Things can, and will, go wrong, whatever analysis you do and however smart you are. But a prayer will give you some strength to deal with the eventualities.
I speak from experience. 🙂
Finally, take Sachin’s advice…
When asked by a leading news daily about life lessons he would like to share with others, this is what Sachin had to say…
It is important to be a nice person. It is the easiest thing to do but most difficult to maintain. Being nice is the test of a true character. You can be a nice person and the rest falls in place. Your passion for sport or your profession is important, that drive has to be there to help you push harder, find a reason to work harder.
It is important to dream and chase your dream. To chase your dream and turn it into reality, you have to be disciplined. There are just no short cuts in sport and life.
I would add to that – There are no short cuts in investing.