In 1972, Bobby Fischer won the World Chess Championship.That year I was doing M.Tech from IITK India and staying at Room Number 316 ,Hostel #4 of IIT Kanpur. I vividly remember the day was 1st Sept 1972 when Bobby Fischer was declared winner defeating Boris Spassky.My immediate neighbour Mr. Behl was doing PhD in Physics,and we both became almost addicted to the game of Chess, and used to play regularly.Occasionally we were joined by Institute champion Mr. Dhawan,and in a very short time I had picked up the game very well,and in that year Chess tounament I was placed 6th,among 48 entries received.Not bad for a novice who started playing just a few months back.
Later after leaving IITK,I continued playing Chess and Contract Bridge,and won a few awards too.In year 1976,I started investing in stocks,and now that I have also started trading in shares,I find that playing game of Chess and Trading in shares,have number of similarities.Some of them are:
- Market sentiment is the “Queen” which can move in any direction.Understanding of market sentiment carries the biggest weightage in share trading,just as Queen has the most points for one piece on the Chess Board.
- Fundamentals of the company are like the two “Rooks” which can move up or down or sideways but at a slow pace signifying the movement of Elephants.
- Technicals of the company,are like the two “Bishops”which can move only diagonally as the data interpretaion of price/volume movement is diagnosed by a Technical expert,who normally does not like to be straightforward.He likes to confuse traders with his interpretation.
- M&A activity in the company is like the movemrnt of two “Knights”,as atleast two entities are involved in M&A and after the event a new entity takes shape.
- All employees are represented by “Pawns”.Some of them can become Queen,but can not take position of the “King” as happens in family run businesses.
So the most important element in share trading is the market sentiment.To understand market sentiment requires the intuitive ability to read the mind of other traders.In today’s Times of India,I was reading about the 13 year old Grand Master PARIMARJAN NEGI from India.And the common trait I found between Bobby Fischer and Parimarjan is the incredibly high retentive power.In 1972 newspapers had reported that Bobby Fischer remembered all the moves that were played during various games with Boris Spassky.And today’s Times of India reported and I quote:
“He remembers all his games.At the age of four Parimarjan’s computer like mind got hooked on to chess.He could foresee the moves of his opponents”
I think people like Rakesh Jhunjhunwalla and Warren E Buffet have also been gifted with excellant retentive power and intuition to foresee the market sentiment,analyse the fundamentals accurately and predict the behaviour of the market with Technical analysis,before others can.Well,my consolation is that I still have 20 more years to catch up with Warren Buffet and send a letter like written by him on 26th June 2006 ,the day I started my blog to my Guru HE Sri Sri Ravi Shankar.I am sure I will be able to accomplish my mission before my visa to visit this planet expires.