Risk and return lessons from cricket

Cricket is one of the most popular game in our country and people usually don’t miss a bit of it. All of us are fond of cricket so much that we even watch highlight after watching the whole match or even if we can’t watch the match, we check the scores on our phones. However, have you ever wondered that cricket can teach you lessons on risk and return? And not just cricket, our life also is based on these fundamental principles.
 
We get excited when our players hit sixes and fours and we even enjoy our players taking opponents wickets. However, if we closely notice our behaviour when our player takes a shot for six or four or is trying to take wickets, we get nervous, anxious. Let us assume that our player has taken a shot to hit a six till it crosses the boundaries we are biting our nails because there are chances of him getting out. In the same way, when we invest, we invest with anticipation of the market rising, however, we face anxiety during the short-term phases of volatility in the market.
 
So hitting a six involves high risk as there are more chances of getting caught but the runs or returns that you earn is also high. Hitting a four is kind of balanced as the risk involved or chances of getting out is comparatively less than hitting a six and even the runs that you earn is comparatively low. The ones and twos are the most conservative and carry the least risk, but the returns are comparatively less.
 
Even the different formats of cricket matches can be compared to different styles of investments. A T-20 cricket match is like short-term tenure, where the volatility is much higher. While a one-day match is like a medium-term investment as the volatility is there, but not as much as T-20 pattern. Test match is long-term and volatility is also less. So now how much you can score in these three patterns? Your T-20 score would be the lowest as the runs or the net returns that you earn would be less. One-day would be medium as the net returns that you would earn would not be the least nor would it be the highest. However, in a test match, your score can be the highest among the stated patterns of play. The same goes for investments.