What is your investment style – T20 or Test format?

• HDFC securities
• 17 Jul 2018
• Knowledge Centre

Everybody functions differently. This is borne out of the differences in personalities. This is very evident in the way different people function in the same situation. A perfect example would be the game of cricket. There are some players who thrive in the fast-paced atmosphere of the T20 format, while there are others who are at their best when patiently strategizing every move over the grueling five days of a test match.

 

The T20 Format Style

 

Some people love the adrenaline rush of stock trading. There is a high risk-reward scenario prevalent in trading. You are constantly in the thick of things and quick decisions have to be made. While the risks are substantial, there are also substantial gains to be made. This is much like the T20 players who have to think on their feet. A batting order that’s great on paper may suddenly fall before a weaker bowling line-up.

 

There goes the form: book, and there goes the plan the coach and the captain made. The batsmen on the pitch need to devise a quick strategy to hold out long enough and pile on the runs. And stock traders, when the market takes a hit, function in a similar way: they immediately start implementing a new plan, which was not formulated before. Never mind the hit. The rush lies not just in riding the highs, but also in swimming through the lows.

 

The Test Format style

 

On the other side of the spectrum, lie the patient, long-term tacticians who analyze everything as astutely as the adrenaline lovers. But these people prefer to take their time, do as much research as it takes, and devise not one, but many plans. They like to be prepared for every eventuality. These are the investors. They prefer earning their worth over a long, grueling period, like the cricketers who shine in a test match.

 

People who function this way may come across as those who are afraid of or unwilling to take risks. However, this isn’t the case. There is a percentage of risk involved even in a long-term strategy. And if something goes wrong, the risk can multiply very quickly, destroying all carefully laid out plans. But, even when the markets take a hit and investments come under threat, the test format style thinkers keep calm and ride out the storm, knowing that their alternative plans are also in place.

 

So, what’s your style of investment?