Lessons from Unconventional Assets: The IPL and Mumbai-Pune Expressway as Investment Case Studies

The Dark Side of Speed in Investing

The world is moving at an unprecedented pace, and the need for speed is becoming increasingly ingrained in our daily lives. We expect everything to be delivered instantly, from groceries to bank accounts, and even UPI payments are faster than ever. This culture of instant gratification has also crept into our investing behavior, with many opting for short-term gains over long-term stability.

Investing in the stock market has become a high-stakes game, with many investors seeking to maximize returns in the shortest possible time frame. However, this approach comes with a significant risk: the extra bit of performance, especially on the upper side, almost always comes with disproportionately higher risk.

The IPL Strike Rate Analogy

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To illustrate this point, we analyzed the top 10 scorers of the Indian Premier League (IPL) in 2025 and 2024. By plotting their IPL career average against their strike rate, we found a clear pattern: beyond a certain strike rate, the average runs scored per innings falls drastically.

As we can see, a batter striking at 132 averages close to 40 an inning, while a batter striking at 163 sees their average drop to 27 or 30. These ultra-aggressive batsmen are scoring around 25 percent faster per ball but are scoring roughly 30 percent fewer runs per innings. These last few points of strike rate are the most expensive.

Driving on the Mumbai-Pune Expressway

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Consider driving on the Mumbai-Pune Expressway, with Indian road conditions. The faster you go, the less time you actually save for every unit of extra risk you take.

Someone driving at 80 km/h can complete the journey in under two hours with a very low probability of a crash. At 100 km/h, one would save 22.5 minutes while keeping the accident risk manageable. However, if one pushes the speed to 120 km/h, the probability of a crash increases substantially. And at 140 km/h, one saves only 11 additional minutes but even a small pothole can become a life-threatening event.

Your Investing Portfolio

Your investing portfolio works the same way. Most investors choose excessive equity due to their obsession over Compound Annual Growth Rate (CAGR). They ignore volatility, which determines how frequently their portfolio will crash, which in turn determines how long they will be invested.

Here's a comparison of a hybrid fund composed of Nifty 500 and 5 Year G-Sec indices, rebalanced yearly, over a 23-year period from January 1, 2003 to December 31, 2025:

As we can see, moving from a 50:50 portfolio to a 100 percent equity portfolio improves the CAGR from 13.14 percent to 16.06 percent — a 22 percent improvement, while the volatility jumps from 10.27 percent to 20.65 percent — a 101 percent increase. The risk rises roughly 4.5 times faster than the returns.

Investing Lessons

Whether it's the expressway, the IPL pitch, or the stock market, the pattern is identical: there is a sweet spot of speed; beyond it, every additional unit of return comes with a wildly disproportionate amount of risk.

Ultra-aggressive drivers might reach their destination earlier, but they also crash more often. Ultra-aggressive batsmen might win some matches, but they also get dismissed more often. In the similar vein, ultra-aggressive portfolios might make one richer, but they also come with bigger drawdowns, more panic, and a much higher chance of exiting at the worst possible moment.

As the saying goes: stay small enough, long enough. You will be big enough, soon enough.