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Olympics and Investments

Estimated reading time: 2 minutes 21 seconds

Congratulations to our sportspersons P V Sindhu and Sakshi Malik on their medals and bringing laurels to the country. But more than that, my respect and appreciation to the 118 athletes and countless others who persist despite meagre means and support from the system.

A headline from a mainstream newspaper (The Times of India, August 24) that caught my eye - "India stingy during training, splurges after medals won". See attached for a picture from that article. Quoting from the article - "..... It appears, therefore, that while most countries spend money on building medal winners, India has a unique model where the money pours in after you've won. Of the 118 athletes who represented India at Rio, 67 were funded by Target Olympic Podium Scheme (TOPS) and received a total of Rs. 17.1 crore. That's less than the amount now being showered on Sindhu and Sakshi alone. Apart from TOPS, an additional Rs. 13.7 crore of assistance was provided to these 67 athletes through various national sports federations, taking the total expenditure on them to Rs. 30.8 crore. In other words, about 60% of that money is now being lavished on the two medal winners as government scramble to bask in reflected glory."

Nothing wrong with showering generous monetary benefits to the winners and I am really happy for them. Other countries also do that after the medals wins but what they spend on preparations for the Olympic games is far more than what is given to the medal winners afterwards. Is there a corollary with investments and how we respond to the performance of our portfolio? I believe there is.

Most times, we tend to notice only the investments which have performed well and start chasing the returns. We put in more funds after the investments with past high returns rather than having an investment strategy that aligns with our risk profile, investment goals and the future potential. We create "hero" investments and start expecting too much from them rather than creating a well-balanced system that delivers overall performance. We want to get results quickly and often ignore the time horizon that needs to be looked at for each of the investment. Usain Bolt has won 9 gold medals in the last 3 Olympics and he has run less than 2 mins on the track. He earned 119 million dollars for less than 115 secs but for those 2 mins he trained 25+ years! Investments are also like that. We have to be patient with them and have a long term horizon, optimal asset allocation for diversification and volatility as per the risk profile.

Mitraz advice is based on creating a diversified portfolio and following a process where risk is well-managed. Mitraz has always believed in being a risk manager for its clients rather than return manager!

The writer is the Managing Director of Mitraz Financial Services Pvt. Ltd and can be contacted at anup.bansal@mitrazonline.com.

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