Main Bhi Dhoni: Why Value Investing is Like the Game of Cricket?

4th National HR Conclave Organized by KIIT School of Management, KIIT University in association with NHRDN
August 10, 2013
Human Resources. Because, it’s the people who make the difference
August 28, 2013

Main Bhi Dhoni: Why Value Investing is Like the Game of Cricket?

Fellow Students of Investing: Greetings!

You’ll agree, won’t you, that examples are easier to understand than verbose explanations?

One particularly useful type of example is the analogy.

With analogies, we try to draw similarities between two unrelated fields. You’ll find that some really great thinkers often use analogies.

Example 1: Steve Jobs

“A computer is the equivalent of a bicycle for our minds.”
http://www.youtube.com/watch?v=ob_GX50Za6c

Example 2: Warren Buffett

Investing is like journalism. You investigate a story from all angles and then draw your conclusions.

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I believe we can easily understand Value Investing if we use cricket as an analogy.

In fact, it is such a good fit that many of you came up with unique insights within 5 minutes of sharing this scenario:

Scenario: MS Dhoni is approached by Coca-Cola and Pepsi to sign up as their brand ambassador. You are a sports management professional, managing Dhoni’s commercial interests.

Examples

No.NameMain Bhi DhoniValue Investing
1Rashmi – 212
Sabyasachi-45
Look at comparables. Value Dhoni by looking at Tendulkar and Dravid.Relative Valuation vs. Absolute valuation
2Apurbaa-122In-form cricketers get more ads.Earning trackrecord or expectations.
3Upananda-170Middlemen earn commisions. So more interested in transactions.Brokerage
4Abhijeet-176Difference in contract price negotiations.No one forces you to buy.
5Mrinal – 199Starry tantrums.There are more technicalities to investing than mere price. Specific contracts have nuances.
6Bikash – 131How can I use Dhoni for my ads?Dividends or captial gains
7Shreyansh-160
Sourabh- 47
Form vs class of a playerProjections, prospects, consistency
8Sumit-229Actual benefit from running Dhoni’s ads.Future prospects realised?
9Nidhi – 203Worldcup gives good ad spaceEconomic boom, business cycles and bull-bear cycles
10Purwak – 209Renewal of contractPortfolio churn
11Reetika – 150Fickle mood of indian cricket fans.Popularity, fads, darling of the stock market, investor pyschology
12Manreet – 84Rapid change in strategyNew product development
13Nitu – 31Valuation based on batting averageValuation based on average earnings
14Neha – 29All rounderDiversification

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Task: What unique insights for value investing can you draw from the “Main Bhi Dhoni” scenario?

Incentive: As always, bonus marks are on offer!

Look forward to your wonderful comments, then.

Until next time!

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