Like most cricket fans who think that they know more than they really do, our equity research team over the past two months has been debating over what is best for the Indian cricket team. While we don’t have a consensus view on that front, we ended up finding a couple of clear parallels that seem to exist in both cricket and investing.

1.The Uncontrollable

For those of you who are unfamiliar with the game of cricket, in day and night matches, as dew settles on the grass, it gets harder for the bowlers to grip the ball and so the team bowling second during the evening tends to have a harder time. As the decision to bat/bowl first is taken by flipping a coin, cricket becomes a good mixture of skill along with luck.

In the 2021 T20 Cricket world cup, teams that won the toss ended up winning the game close to 66% of the time. Eleven of the thirteen games hosted in Dubai, were won by the side winning the toss. Was luck playing a big role in each game?

In the 2022 T20 world cup, we saw rain play spoil sport in the group stage. The game between South Africa and Zimbabwe was called off due to bad weather. The game between Australia and England was also called off due to bad weather. Eventually South Africa and Australia just missed out on making it to the knock out stages of the tournament.

Clearly, cricket has a fair share of uncontrollable factors that impact a game and/or the tournament. When luck is playing a significant role in an outcome, it can often be tricky to come to accurate conclusions. As Nassim Taleb has touched upon, you don’t want to mistake skill for randomness and come to faulty conclusions.

This is where added analysis needs to be carried out irrespective of the result. This is the very reason why as investment managers, we tend to focus on our investment process, as the outcome, especially in the short run, can be swayed by a bunch of uncontrollable factors.


2. A Game of odds

For a second, let’s assume that the two best teams have made it to the final. Furthermore, the stronger team has a 60% chance of victory as compared to 40% for the weaker team. Now the odds that the stronger team ends up winning, increase if this was a series. The table below demonstrates the same.

Number of Matches Probability of Stronger team winning the series
3 Match Series 64.8%
5 Match Series 68.3%
7 Match Series 71.0%

Unfortunately, the world cup final is a single game and not a series. This makes the sport entertaining as the odds of an upset are higher, even more so in a twenty over game.  However, as investors we don’t want upsets.

This is the very reason why you want to invest for the long run. Even with a small edge, the odds of generating outsized returns increases as the length of one’s investment horizon. Simply put, the longer the series, the better. (As long as you have an edge)

So knowing this, what do you take away as a cricket fan and an investor?

  • For starters we marvel over the dominance of the Australian cricket team from 1999 to 2007. After all, in a game with some amount of luck in tournaments with not a lot of games, they ended up winning three world cups in a row. A truly skilled team for that era.
  • Having a World Cup in poor weather conditions is far from ideal.
  • Investing with a long term horizon while focusing on one’s investment process becomes crucial.
  • Maybe, just maybe we tend to overreact to an outcome, while discounting the role uncontrollable factors may have played in that outcome.


The article is co-authored by Anup Maheshwari & Dhruv Maniyar and was first published in Economic Times.  As of February, 2023, Anup Maheshwari is the Co-Founder and Chief Investment Officer at IIFL Asset Management. Dhruv Maniyar is Assistant Manager (Research) at IIFL Asset Management. 

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