Cricket's lessons for investors: The importance of choosing the right approach
game with 20 overs a side. Batsmen were no longer afraid of survival. Lasting 20 overs was less of a challenge but scoring well in each ball was the only objective.
Techniques mattered less. Unconventional batting took over orthodox and we saw various innovations like switch hit and so on. Take any sport/game which has multiple formats.
Let's say marathoners vs sprinters: they are built very differently, train differently, eat differently. One is about a short sprint at peak speed while the other is about a long run at a consistent pace without causing any self-injury. Sprinters are more muscular while marathoners are lean.
Both run, but their objectives are different and timelines are very different. Take chess for instance where the classical format would have long hours of 1 single game while rapid or bullet would test the same skills with a tight time constraint. The vectors change and the game changes dramatically.
Investing and trading are what test and T20 are to cricket. One is a true test of skill and the other is a test of accuracy. If you have time on your side, you can afford to be inaccurate in the short run but it can be costly if you don’t.
Hit out or get out is the objective in T20. In trading parlance, there will be tight stop losses, where if the stock falls, you take your losses and move on. Time is indeed money in trading.
Trading focuses more on price movements in the short term while investing focuses on value movement. One needs to know which game you are playing. Value moves very slowly as results are published only quarterly but valuation keeps moving up and down by the second depending on how the price moves.
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