Investing Lessons from MS Dhoni

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The Day MS Dhoni Announced Retirement

Every cricket fan will remember 7:30 pm of 15th August 2020, when former India’s cricket captain MS Dhoni announced his retirement from international cricket.

For me it was a very emotional moment as Captain Cool decided it was time to pass on the baton to the next generation.

As a cricket fan, all I would ask for a farewell match to see him marching down those 22 yards one last time, lightning-fast stumping, and that calm face in the final overs.

It was like yesterday when MSD set his foot on international ground. In his first match, he got unlucky and was runout without putting any score on the board.

Who would have known then that this unorthodox player will give Indian cricket every international trophy?

To begin with, India’s most admired cricket captain Saurav Ganguly had seen his potential. In one interview, he mentioned MSD having a lot of potential and passion for the game.

It was exactly the reason, he backed him up by giving up his batting spot and MS Dhoni didn’t disappoint him.

Cricket legend Sachin Tendulkar spotted him as a captaincy material for leading India’s T20 team in 2007. No one will forget the final match with Pakistan, nail biting last over and Joginder Sharma was bowling.

Sitting home, we thought that MS Dhoni has practically given up but he had other plans.

His plan was to bring the trophy home and he did just that. Since then, the 2011 World Cup and the 2013 Champions Trophy put Indian cricket on the map firmly. 

Apart from Saurav and Sachin, there were other few cricketers or insiders who understood MS Dhoni very early. But a large part of Indian cricket lovers couldn’t.

One can argue that when MSD started playing internationally, we were too focused on The Fab 5 – Sachin, Saurav, Sehwag, Dravid, and Laxman. Yuvraj Singh too was a force to be reckoned with.

In an era of stylish cover drives, copybook straight drives, strong front foot defense, and some solid aggression on the field, an unorthodox wicket-keeper batsman wasn’t noticed much.

Let’s draw some investing lessons from the life of MS Dhoni.

Every company enters the small and midcap space first. Then dominates the ring for some time enter the large cap space and then chosen few go into Nifty50. Yet, most retail investors tend to miss out on what’s happening right infront of their eyes.

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It’s convenient to argue that it happens due to constant focus on news, unable to distil information from noise, an urge of constant trading, and not having the patience for the power of compounding to kick in. 

It’s almost a similar medicine, in a slightly different formulation.

We attempt to combine our love for cricket and passion for research to look out for a 3 key variables that helps us to find such geniuses early. 

Unconventional Approach

Leaders define their own approach. They don’t follow tested waters, but sail in unchartered territories. It makes them Unpredictable and opposition is always afraid and in awe of them at the same time.

Mukesh Ambani is highly unconventional with his business. Running a giant conglomerate with the size of Reliance Industries, it was impossible to believe that he will change completely.

From being in the oil business to dominating telecom and data business is a story of immense belief and a completely unconventional approach.

After consolidating the entire telecom sector, it feels that Reliance Jio has just started.

Dhoni too has a similar characteristic. Promotes himself ahead of Yuvraj Singh in the World Cup 2011 final against Sri Lanka because Murlidharan was bowling. And when he hit that final 6 in Wankhede Stadium, Mumbai – his face was cool and calm. He could play for another 50 overs and not get tired. Such is his performance under pressure.

Learning Machine

Leaders are avid learners. They learn from reading, travel, experiences, etc. In fact, it’s the ability to learn at a rapid pace helps them to act in their professional career faster and better than others.

Charlie Munger calls it the latticework of mental models. Over the years, they’ve developed so many skills that everything comes together to create some form of uniqueness that cannot be copied.

Elon Musk a serial entrepreneur and is known for being a learning machine. His journey from internet company to electric cars and rockets fascinates every person who learns about him.

Ashlee Vence his biographer has quoted in his book that as a child Elon would read, read and read for a lot of hours. Infact, he finished all the books from his neighborhood library too.

People who work with him are often quoted by the media on Elon’s immense ability to absorb new information and create an action plan in a matter of seconds.

It truly cannot be copied.

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Dhoni too possesses such a unique ability. He is one of the greatest finishers in the game of cricket. Ian Bishop’s statement is proof of that. To handle such pressure requires a calm head, a complete understanding of the game, and not let the thought of result affect your batting.

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Time and again, we have seen MS Dhoni taking the match to the final few overs and we have sipped our coffee to see the fear on the opposition’s face.

Staying away from limelight

There are many companies whose products we simply love but never know who the owner really is.

The likes of liquor baron Vijay Mallya who used to regularly flaunt his page 3 appearances have not created a lot of wealth for their shareholders, while some have contributed to shareholder’s wealth destruction.

Great leaders tend to stay away from the media. It helps to cut the noise and focus on what’s really important.

Innerwear space is dominated by Jockey products. Yet there are very few people who know who the real owner is.

Even in the equity market, retail investors get intrigued by looking at the price of Page Industries but have little or no idea what business are they in. So let me bust the myth here, Jockey is a brand of Page Industries. Okay, but do you know who the owner is? 

Page Industries is a Banglore based company owned by Genomal family. Its shares were listed around the same time as Reliance Power. On the day of listing, it’s shares had fallen by 20% to hit a lower circuit.

Reason being, Genomal family didn’t spend a lot of money to drum up their IPO. Yet, the share price performance has been impressive. Have a look with last 10 year’s stock price CAGR at an impressive 31.62%

Image curtsey: screener.in, Page Industries

Dhoni too likes to stay away from media. Whether it’s after winning a match or losing one. Even if there are any controversies going around team selection, Dhoni likes to stay away.

There is a not a single negative comment out in the public for his team mates or opposition in his entire career. Keeping his life private and an absolute focus on the game has helped him break every record.

Let’s have a look.

World Cup of 2011 and 2007 in a single frame

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Winning the Champions Trophy 2013

Personal Finance Implications

At Circle Wealth Advisors, we focus on Asset Allocation as our key criteria with our clients. Wealth is created with following the right discipline with our money.

Once we build an asset allocation model or an investment portfolio, we don’t change it often. It runs as per our original investment thesis and the risk profile of the client.

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What if we change it often? Are there chances to create short term profit booking and re-entering when the timing is right?

In theory yes, it can be done. But that’s, unfortunately, the end of theory. Consider if MS Dhoni changed his entire team every time he went to play. Rohit Sharma to be dropped for match against Australia, Jadeja went for a lot of runs in the last match so drop him for the next 3 matches and Virat Kohli is performing very well at number 3 so give him the opening batsman spot.

Is this possible in theory? Yes. In practical? Absolutely NO.

Dhoni’s aim is to prepare a team that can play in every condition and every format. It’s not about a few players not performing well for a short period of time. Only if a player has lost touch or is out of form for some valid cricketing reasons, then we see some shift.

Even for our portfolio, constantly shifting money just because Gold is performing better or equity is just not giving returns will not help us to reach our goal of financial freedom. The idea is to create a balanced asset allocation where a portfolio has real estate, gold, equity and debt. The combination is optimum for an investor to be financially free.

Lastly, how to identify these giants when they are small?

It’s very difficult. Only a few experts like Saurav and Sachin who are close to Dhoni can understand him.

For us spectators, it’s not possible even if we know he has potential, will he go all the way! Similarly, in stock market – it’s impossible to know which small company will become the next multi-bagger.

The reason is the same – there is very little public information about it. Even if we somehow manage to get it, we still won’t allocate 50% of our equity portfolio to it.

Hire an expert personal finance expert who is closer to the game. The person who understands how markets operate and whose job is to ride the next multi-bagger.

In short, hire an expert like Saurav Ganguly and Sachin Tendulkar.

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Cover Image: The Guardian

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Jinay Savla

Jinay Savla

Wealth Manager I Personal CFO I Finance Blogger I 10x in 10 Years I Podcast
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