Anand Sridharan works at Nalanda Capital and writes a super interesting blog called Buggy Humans in a Messy World. In his latest blog, he draws upon a well-worn analogy between Test Cricket and long-term investing and then extends the analogy beautifully to highlight the insanity that is perpetrated by many investors. He begins with what should be familiar territory for most Marcellus clients: “Picture a talented young batsman, who has done well at local level, aspiring to play Test cricket for India. How would he work towards his goal…he is likely to ask:
Who has achieved the most in this domain & what can I learn from their ways?
He will figure that three stand out – Gavaskar, Tendulkar, Dravid – for having scored over 10,000 runs at over 50 average. As he studies their game, he will also realize how much the three have in common on classical technique, temperament, discipline, knowing where off stump is, which balls they choose not to play etc. While styles differ, what is common overwhelms what is different.
As he stares at India’s current Test team, he will notice that the more accomplished batsmen – Rohit, Virat, Pujara, Rahane – play their Test cricket in the same mould as the three GOATs. As does the latest talent, Gill.”
Then he says that in the investing world the GOATs are the duo who have crafted Berkshire Hathaway (part of Marcellus’ Global Compounders Portfolio). It follows therefore that “Assuming that aspiring investors are smart and driven to achieve excellence in their domain just like the aforementioned sportsman, one would assume that they would align their ways to the GOAT way. Even if there is some deviation, it is reasonable to expect a decent degree of overlap. Generously, GOATs have left detailed descriptions and track record spanning many decades, making aspirants’ task even easier.”
Then Anand uses a table to show that most investors do the opposite of what the GOATs do. Eg. the GOATs say that you should not waste time trying to figure out macroeconomics; most investors on the other hand seem to believe that interest rates and GDP growth and geo-politics are critical factors in making investment decisions. Another example, the GOATs have been saying for 50 years that investing is about sitting alone and reading and thinking; most investors on the other hand spend lots of time at investor conferences meeting brokers, strategists, economists, psephelogists, etc. It is worth reading Anand’s blog in full and savouring that lovely table at the end of blog to understand the insanity that is perpetrated in the name of long term investing.
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Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
