Home > Cricket News, twenty20 > Market volatility gives investors a sporting chance

Market volatility gives investors a sporting chance

While the home nation sets the rugby ball rolling against Argentina at the Stade de France tonight, cricket fans will be champing at the bit for the start of the inaugural Twenty20 World Cup Championship.

Pedestrians along Corlett Drive on Tuesday will be well-advised to wear their hard hats as South Africa and the West Indies get the fast-paced cricket circus under way at the Wanderers Stadium.

Cricket supporters enjoy the intensity of this form of the sport with a game usually completed within the space of just three hours.

Purists of the five-day game may feel that the Twenty20 format is “just not cricket”, but the truth is that all versions of the game are important in ensuring the continued success of the sport.

The equity market is no different.

Ultimately, the purpose of the market is to raise long-term capital for corporations, with investors – the suppliers of capital – buying shares and holding on to them as long-term investments. That’s the purist’s view of investing and it’s hard to fault a long-term buy and hold strategy incorporating blue chip shares.

There’s a much shorter version of the game, however, where investors, or rather speculators, trade in the market with the express objective of making short-term profits.

These speculators have a much shorter investment horizon where it would not be uncommon to buy in the morning and sell in the afternoon.

Trading on such a short-term basis is just as much about the excitement and the thrill of the market as it is about turning a profit.

Twenty20 games are accompanied by much fanfare with music, fireworks and dancers all adding to the excitement of the occasion. Market traders raise the level of excitement in their game by gearing up through the use of derivative instruments such as single-stock futures.

Categories: Cricket News, twenty20
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