The summer of cricket is now upon us, can it teach us anything about investing? 

While a T20 World Cup Final might be far more exciting than watching a 5-day test match (depends on who you ask), there is far more patience, skill and strategy involved in a Test Match. For test match cricketers, patience and a long-term approach are key values that need to be present and the same can most definitely be said for investing. 

Productive and successful investment strategies are well planned and well researched, yet many are often drawn to risky approaches and overdramatic headlines and spend far too much time buying and selling investments or trying to time the market with tactical changes. 

As you will have read in many previous blogs, at Hewison Private Wealth we build diversified portfolios and take a long-term investment approach which provides us and our clients with confidence moving forward, irrespective of underlying economic conditions. While we understand interest rates, recession, wages, unemployment, and inflation are all incredibly important, we do not let them dictate our strategies. While there have been multiple negative news stories in the media in the last year, the ASX200 has shrugged this off and risen by 11.9% since July 1st. Back to Cricket. 

If you do not know the rules of cricket or test match cricket specifically, do not fear. The very basics of cricket will help you understand a successful investment mindset, move forward with confidence, and feel like the next Warren Buffett or Ricky Ponting (apparently, he is worth $95 million!) 

1. It is a long game 

Just like a 5-day test match, playing the long game in investing is where you are going to get the most results. The sharemarket can be a volatile beast, sometimes the price of shares goes up, and other times they plummet. The only way to counter these price movements and volatility is by sticking with your investments over the long term and not worrying about them the moment they lose value. History shows us that the market always bounces back, but it does not necessarily do that within one or two years, hence why investing short-term carries risk. 

2. Cover the field 

When the other team’s best batsmen bats ten balls in a row to the same area, it could be tempting to put every one of your available fielders in that spot. Unsurprisingly in Cricket, you don’t often see this happen, and the reason is obvious. Do not put all your eggs in one basket. 

Diversification is another key component to investing the way that we do at Hewison Private Wealth. By having shares in multiple companies and investments in multiple asset classes such as fixed interest, property, cash and equities, our risk reduces dramatically. Coupling this strategy with long-term intention is how we can safeguard our clients’ portfolios from losses. 

A good cricket team also has diverse expertise, in both batting AND bowling. It’s not often you would see a team put together with 11 batsmen – you would need to hope they win the toss and bat first or there would be disastrous results.  

3. Ask the Coach 

The final and most crucial step for cricketers is to ask the coach. When It comes to investing, this means asking your financial planner. A financial planner has the knowledge, experience, and ability to help you make smart and informed strategic and investment decisions. A successful investment portfolio can form an especially important part of your plan and help you achieve your ideal lifestyle. If you or someone you know may be interested in reviewing their financial plan and investments, please contact us at Hewison Private Wealth to speak with an adviser.