Going Back to the Drawing Board

(This column was first published on Value Research Online.)

Anybody else feel bad for Virat Kohli? I know I do. I’m writing this after the second ODI between India and England, in which Kohli was out for another duck. The first ODI was washed out, and I hope Kohli isn’t wishing for the rest of the tour to be washed out as well. He’s important to Indian cricket and it’s painful to see him so out of his elements.

I’m no cricket expert, but I’ve been reading columns by cricketers-turned-experts and most of them seem to suggest that Kohli needs to go back to the basics. Go back to the drawing board, so to speak. He needs to work on his technique, maybe alter his stance or grip, make his footwork more nimble, etc. All of this sounds like a sensible thing to do. And like most sensible things, it’s also very obvious.

We know this because we do it often, sometimes even without being aware of it. We reset and go back to doing the basics whenever we fail at our business or get out of a relationship or recover from an illness. Whenever we need to get back on our feet, literally or otherwise, we have to chuck fancy endeavours and start with the basic steps. There’s no way around it. Not in life, nor in our mutual fund investments.

More often than we’d like, we, at Value Research, get emails from investors who have invested in some sector or thematic fund and don’t know what to do with it when it keeps going down in value. Most sectors and themes are cyclical, and none of us can predict which way and when the cycle will turn. Investors put their money in such concentrated funds, ride the upturns with glee and fall into a quandary when the downturn begins. The problem is that this ends up being a hole that’s not easy to get out of.

It is when they’re in such a hole that investors seek our advice about what to do with their consistently underperforming thematic or sectoral funds. And what do we tell them? If you’ve been an avid follower of Value Research, you’d know – we tell them to square up their losses and invest in a diversified fund. In effect, we tell them to go back to the basics. And really, that’s the only way that most of us should be investing in the first place. We don’t need anything more than the basic kind of mutual fund – the vanilla, diversified fund that can invest across sectors, themes and market caps.

The chances of failing go down drastically when you keep doing the basics right. Why try our hand at something fancy and go back to the drawing board when that has failed? Why not just keep doing the basic thing? It’s what Kohli’s predecessor at the No. 4 position in the batting line-up, a certain Sachin Tendulkar did. And it’s what you should do.

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