Many of us are in search of Top 10 Diwali 2021 (Samvat 2078) Mutual Funds / Stock picks. It is a festival season and especially the Diwali festival. For around a week from today, TV Media, Print Media, and Social Media turn abuzz with Diwali 2021 (Samvat 2078) stocks and Mutual Fund picks. Whether choosing the stocks or mutual funds based on the festival is the right strategy?
Top 10 Diwali 2021 (Samvat 2078) Mutual Funds / Stock picks
Last year also I wrote a similar post to caution and thought to repeat the same again. However, adding few more examples in this post to add more value to what I shared last year.
During the last year’s Diwali time, the Nifty 50 Index was at 12,800+ level and today it is at 18,200+. This is a fantastic return of almost around 50%+. Same way, Nifty Mid Cap 150 return is around 70%+, and the Nifty Small Cap 100 return is around 80%+.
Hence, overall if we look at the last year to this year the equity market performed fantastically. Each day market is touching a new high.
If you visited this post to know my Top 10 Diwali 2021 (Samvat 2078) 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 40,000 or 50,000 levels in the next 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 what 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
The classic example is the recent market crash prediction of Robert Kiyosaki, author of the popular “Rich Dad, Poor Dad” book, predicted a “giant stock market crash” in October.
We all grew up by reading his wonderful book and dreamt of implementing the same in our personal financial life. However, if once the conflict of interest enters into any profession, then their recommendations change, and their way of behaving changes. The classic example is Robert Kiyosaki. Someone shared that he is currently writing a book on Crypto and hence this tweet to gather the frenzy idea. He has a huge fan following and being aware of this, such predictors don’t bother about the repercussions.
Cullen Roche replied by taking the past Kiyosaki’s wrong tweets together and creating the image for our reference. This I used and tweeted few days back. One such favorite response came from Ben Carlson as “rich author, poor readers”.
I am sharing this example not because he was wrong many times. His predictions may turn true also sometimes in the future. However, what we have to understand is that among 10 predictions if 1 prediction turned correct, then these experts highlight that as if a big success and fool us for the rest of our life. Because one such right prediction creates a strong impression in us that such numerologists are RIGHT.
Even a broken clock is right twice a day. If that clock happens to predict the next time you could lose money, you still might listen. This is what happens with these pundits.
If you look back at the 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 did they predict the market coming back so fastly.
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 the 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.
Do remember that out of 100 predictions few predictions may turn RIGHT based on probabilities. They highlight such probabilities and lure us to believe.
As the market outperformed all our expectations, this year while predicting for Top 10 Diwali 2021 (Samvat 2078) Mutual Funds / Stock picks they highlight the returns and force you to believe that they are really right. However, whether such outperformance is because of SKIL or LUCK is unknown to us. But they show it as their SKILL.
Note:- Do remember that MARKET TIMING has no such huge impact on your long-term investing. Recently in my earlier post, I did the research of past 18 years data where Mr.A invests every month only when the market is high, Mr.B when the market is low in that month and Mr.X do monthly investment on the same date (5th of every month) without bothering the market up and down. The results at the end are interesting. Refer to my post on this aspect at “Best Market Timer Vs Worst Market Timer Vs SIP Investor of Nifty – Who is the winner?“.
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 rumors surround yourself that the market may go UP or DOWN.
# Stick to your defined asset allocation rather than changing the allocation just because there is an opportunity 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 to my post “Top 10 Best SIP Mutual Funds to invest in India in 2021“. Here, I review the funds, and based on my knowledge, I recommend the funds once a year. I am writing such posts for 6 years and I hardly change my stance on funds (unless there is a drastic change in some regulations or fund performance).