Are you in search of Top 10 Diwali 2020 (Samvat 2077) Mutual Funds / Stock picks? If so, then at first read this post. It is a festival season and especially the Diwali festival. TV Media, Print Media, and Social Media from now onwards to for around a week abuzz with Diwali 2020 (Samvat 2077) stocks and Mutual Fund picks. But choosing the stocks or mutual funds based on our festival is the right idea or strategy of investment?
If you visited this post to know my Top 10 Diwali 2020 (Samvat 2077) Mutual Funds / Stock picks list, then sorry it is not to share my recommendations. Instead, I am trying to say you that why you MUST stay away from such festival based recommendations.
Let me share with you the quote of John Kenneth Galbraith.
“Pundits forecast not because they know, but because they are asked.” — John Kenneth Galbraith
This quote perfectly matches with those who actually try to predict the stocks or fund movements. None were in a true sense aware of what is going to happen in the future. However, these experts have a brand name called PUNDITS. Hence, they have to predict something. Also, there is no responsibility for whatever they will predict. One may predict the Nifty touch the 20,000 or 40,000 levels in the next one year. Who can question them for their wrong predictions?
But we all love the predictions of these so-called experts. Based on their recommendations we invest. No matter whatever the reality, we love to fool ourselves from such predictions. But not ready to accept that we have been fooled. I am remembering a quote of Mark Twain in this situation.
It’s easier to fool people than to convince them that they have been fooled – Mark Twain
If you look back at 2019 Diwali picks of these experts, then ask yourself whether they predicted the Corona Virus crash of the market? Even after the crash, how many of these experts actually predicted the market come back. The simple answer is NONE were predicted the market crash nor they predicted the market come back.
However, we still try to be fancy with these Diwali picks which the media will bombard us. Media is meant to SELL the news (sorry NOISE) which excites you. Because for them their TRP rating matters than anything else. Those who are in search of hot stocks or funds are obviously the scapegoat of such madness. We look for short term performance and their star ratings, then blindly invest in these without bothering risk and suitability.
It is not the fault of media but the fault of our brain. We love predictions and especially when it comes to investment. Jason Zweig’s below quote perfectly matches our psychological tendency of searching for predictors. This is what Jason Zweig calls prediction addiction.
“Just as nature abhors a vacuum, people hate randomness. The human compulsion to make predictions about the unpredictable originates in the dopamine centers of the reflexive brain. I call this human tendency ‘the predication addition’.” – Jason Zweig (Your Money and Your Brain).
But you are not alone in this prediction loving journey. No matter whatever they call themselves, the majority of those who are linked to stock market loves to look at such predictions.
At first, we don’t know the capability of these forecasters, their conflict in suggesting you, and to what extent they are correct. But still, we follow such forecasters. Let me share with you what Warren Buffett told about such forecasters.
“We’ve long felt that the only value of stock forecasters is to make fortune-tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.” – Warren Buffett
That is the reason, I always brand these so-called experts or forecasters as NUMEROLOGISTS or PALM READERS of the stock market but not as EXPERTS.
How to stay away from such NOISE?
# Switch off business news channels or media (including social media) where the predictions will continue for the next week.
# Stick to your goal based planning no matter what many rumour that market may go UP or DOWN.
# Stick to your defined asset allocation rather than changing the allocation just beacuse there is an opporunity to invest.
FINALLY, TRY TO CONTROL WHAT CAN BE CONTROLLED LIKE RISK MANAGEMENT AND YOUR BEHAVIOR. You can’t control the market or the market will not treat your money, especially just because you have invested. The controlling should be through proper asset allocation as per your goal time horizon.
HENCE, LET US CONTROL THE CONTROLLABLE THAN TRYING TO PREDICT OR BEING IN THE TRAP OF THESE PREDICTORS (SORRY….NUMEROLOGISTS).
If you really want to read my recommendations, then refer my post “Top 10 Best SIP Mutual Funds to invest in India in 2020“. Here, I review the funds and based on my knowledge, I recommend the funds once in a year. I am writing such posts since 6 years and I hardly change my stance in funds (unless there is a drastic change in some regulations or fund performance).
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