Wow…what is the connection?

Well just trying to see that the world itself is a series of compounding. Our hills and mountains are a result of compounding of centuries of compounding. Our lives are too small when you compare it to the universe, hence we understand less.

Lets see the history of Indian cricket. Till 1947 we were ruled by the Whites. In fact they were the ‘inventors’ of cricket. Did we ‘non whites’ even think that we could beat them? How dare we? (forget Lagaan!!).

Take a team that went to Great Britain in the 1950s. Even earlier, it was only our kings who played cricket – remember it was a hobby till the 1970s. This meant only rich people who had no need to worry about making a living could play cricket. So Maharaja of Baroda, Maharaja of Bhopal, Pataudi, Hyderabad…..were the patrons of cricket. Imagine these guys putting together a team and playing cricket. It could hardly be called a team!

So there was no chance of India winning in the 1950s or even the 1960s. Yes we had talent, but no great scientific process of playing. True for most countries – hobby was a hobby after all. You did not play for money, you just played for honor.

Came the 1970s when it got a little better. Remember, SM Gavaskar a successful batsman had to still work for a corporate called Nirlon to make a living. In 1971 by fluke or luck we won 2 matches – one in West Indies and one in England. Amazing scenes were witnessed in Bombay and Delhi. A BEST bus was used to ferry them home – an open bus so that people could see them. It was a slow procession from Santacruz!

So the team which travelled to England, West Indies and Australia to “Improve relations” etc. suddenly thought it could win. Then in 1983 there was ONLY one man who believed that India could win. It was Kapil Dev. Nobody else. Srikant was planning a honeymoon to USA, SM Gavaskar was not perhaps not even keen to win under a captain other than himself (his behavior in 1979 is well documented). I could not imagine Venkatraghavan the captain being able to handle SMG or Bishen Bedi in 1979!

However, by the 1980s we had won a few matches here and there. Kapil dev built on Wakekar’s team. Gavaskar was an apology of a captain. Then it was Ganguly. Rahul Dravid. Dhoni. Virat Kohli.

Kohli has to realize that he is like a sculptor – the final hammer on the stone did not create the statue. All the hits on the rock had contributed to the finished statue.

So Kohli got the compounding effect….from CK Nayudu, Lala Amarnath, Vinoo Mankad…..right up to Dhoni.

Let me take an example. My grandfather was the chief accountant of Bombay Municipal Corporation. He was not rich, but surely my father did not have to ‘support’ him in his old age. My grandfather had his own house, a nice pension, and lived on his own till his death in his 80s. My father created wealth for himself – he had a couple of houses..and a damn decent portfolio. Ditto me – I did not have to dip into my earnings for ‘supporting’ my parents. In fact my Dad’s portfolio will more than take care the needs of retirement for me and my sister.

See how compounding works across generations? You need not get money, but the fact that you do not have to pay helps in compounding from the first salary. It is like coming into bat at 154 for 1 in 18 overs. If you have to get 48 runs to win in 32 overs….you just need to thank Sehwag for plundering in the first 18 overs…and then play simple cricket.

You must remember that one day we will lose it all. The reverse of compounding has to be called “draw down” or “destruction”. If you do not do good asset allocation – say equity in India, USA, Europe, Asia ex Japan,….you might see years of negative compounding aka destruction. For example over the last 10 years the dollex (Sensex in dollar terms) is zero. If you have invested in Rupees, you don’t really care, but you do realize that serious compounding could have happened in USA, even Brazil and Russia at various points in time.

Do remember that compounding is a far more complex concept than what you studied in class 7 or 8. It is time you understood how to apply it. Wake up.