Which are the Top 10 Diwali 2022 (Samvat 2079) Mutual Funds / Stock picks to invest in? Whether one must follow these mutual funds and stock recommendations and change our portfolio yearly?
For the next one week, media and social media are abuzz with Top 10 Diwali 2022 (Samvat 2079) Mutual Funds / Stock picks. Let me clarify one thing, if you are really searching for the TOP 10 Stocks and Mutual funds, then don’t read further!! Otherwise, you can read.
The theory of probability is one of the biggest tool the financial industry use to predict future performance. How successful they are unknown to us. However, they force us to believe that their predictions are 100% sure.
Let me share with you what Daniel Kahneman wrote in his famous book “Thinking, Fast and Slow”.
“Mutual funds are run by highly experienced and hardworking professionals who buy and sell stocks to achieve the best possible results for their clients. Nevertheless, the evidence from more than fifty years of research is conclusive: for a large majority of fund managers, the selection of stocks is more like rolling dice than playing poker. More importantly, the year-to-year correlation between the outcomes of mutual funds is very small, barely higher than zero. The successful funds in any given year are mostly lucky; they have a good roll of the dice. There is general agreement among researchers that nearly all stock pickers, whether they know it or not-and few of them do-are playing a game of chance.”
Even though they are playing the game of probability, financial experts force us to believe that their predictions will happen certainly in the future.
Assume that the financial expert whom you are following is around 45 years old guy (my age). If we assume, that he started his profession at the age of 25 years, then he is in this profession of PREDICTION for 20 years. How many recessions, bloodbaths in the market, bull markets, or wars this guy might have faced?
Each may be less than 5-6. In such a situation how can we judge this expert’s opinion with certainty? The investment world provides us with fewer opportunities to experience our own life and predict the future. However, history is full of examples. If we learn, prepare and invest, then we are far smarter than those who are in this prediction business.
However, our mind not works this way. Before we invest, we need confirmation from the so-called experts and there are such self-proclaimed experts in media and social media. They appear and declare the Top 10 Diwali 2022 (Samvat 2079) Mutual Funds / Stock picks, which force us to believe and invest as per their recommendations.
25+ years ago, Charlie Munger gave a talk called The Psychology of Human Misjudgment. He listed 25 biases that lead to bad decisions. One is the “Doubt-Avoidance Tendency,”. According to this tendency, most of us don’t think in probabilities. It’s natural to quickly seek one answer and commit to it. This is what we all as investors try to look at experts saying – You are an expert. You do the research. Just give us the readymade stocks or mutual funds. We INVEST.
Exploiting this tendency of humans, TV Media, Print Media, or Social media list some readymade stocks and mutual funds. Nothing wrong with them. Because we are expecting and they are fulfilling our wishes!!
However, have you ever asked the question – what is your financial status with the person who is recommending you few stocks or mutual funds to invest in Diwali? What is your risk appetite to the person whose advice you are eagerly awaiting to follow? If the person who is recommending you lost around Rs.10 lakh, then it may not be a big issue for him. However, a loss of around Rs.1 lakh may be the biggest disaster for your financial life.
Once again sharing two quotes that I shared last year also to REMIND YOU.
“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).
“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
Nifty is down by around 5% from what we were last year (Nifty level as on 18th Nov 2021 to 18th Nov 2022). Cross-check those last year’s predictions. Check how many of those predictions were RIGHT or WRONG.
Many of these experts at that time thought that Covid worst was over and the market will be on an uptrend mode for the next few years. However, none expected the Russia – Ukraine war and none expected the inflation impact on the developed countries.
The game of prediction is full of probability. Where sometimes LUCK may also play a part and they claim this also as their SUCCESS. Show me one fund manager or these predictors who accepted that in their predictions LUCK played a role. NONE…
I wrote an article based on the past 18 years of Nifty TRI data to show that market timing or prediction is a FUTILE exercise. I did the research of past 18 years of 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 does 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 in “Best Market Timer Vs Worst Market Timer Vs SIP Investor of Nifty – Who is the winner?“. Even I provided that there is nothing called as BEST day to invest with one more post “Best SIP Date for Mutual Fund Investment in India“.
There is a thin difference between financial experts who predict and recommend products to PALM READERS or NUMEROLOGISTS. Only their color is slightly changed. Palm readers or numerologists speak about our life and these financial experts about money. Rest everything is SAME.
Top 10 Diwali 2022 (Samvat 2079) Mutual Funds / Stock picks
Now, rather than Top 10 Diwali 2022 (Samvat 2079) Mutual Funds / Stock picks, I wish to share with you five ideas to upgrade yourself. These are the kinds of gifts you can give to your investment.
Try to update yourself with wonderful books available about investment. My recommendations are as below.
- The Intelligent Investor – Benjamin Graham
- The Psychology Of Money – Morgan Housel
- Common Sense On Mutual Funds – John Bogle
- A Random Walk Down Wall Street – Burton Malkiel
- Your Money and Your Brain – Jason Zweig
Yes, many think that investment is more about product selection or buying and selling. However, it is more about the behavior aspect. If you are successful in your behavior, then you can easily win the game of investment.
Burn your ego this Diwali. Just because you have invested in a particular fund or product, it does not mean that has to perform BEST. Once you invest, then your task is just to look at the performance. You can’t control the performance of the market of funds after that. Hence, but that ego and accept the realities. You may be highly qualified in your field. However, in the investment world, it is EQ that matters a lot more than IQ.
# Be your own Planner
After being in this industry for more than 12 years, I can say that investment is more of common sense and behavior than market timings or product selection. Hence, using these two traits try to be your own financial planner. You can use our Do It Yourself (DIY) financial planning module. For how many years you depend on someone else to manage your money? One day or another day you have to take care of this. Then why not take action?
# Stop PREDICTING
No one is aware of the future. This is the hard truth that you must learn fastly when you are entering the investment world. The more you learn fastly the better for your money. Otherwise, you will always be in search of these top picks of stocks or mutual funds.
How to run away from Top 10 Diwali 2022 (Samvat 2079) Mutual Funds / Stock picks?
# 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 posts “Top 10 Best SIP Mutual Funds to invest in India in 2022“ and “Top 10 Best Debt Mutual Funds to invest in India in 2022“. Here, I review the funds, and based on my knowledge, I recommend the funds once a year. I am writing such posts for 7 years and I hardly change my stance on funds (unless there is a drastic change in some regulations or fund performance).
Few articles which I wrote the last year that you may like to read are as below.
- Best SIP Date for Mutual Fund Investment in India
- Why Large Cap Mutual Funds invested in Paytm IPO?
- What was my advice when stock market crashed in 2020?
- Your colleague as your Financial Planner!!
- Education Qualification is the least required qualification for investment
- Frustration is the KEY to FAILURE!
- Your returns are not YOURS!!
- How SEQUENCE RETURNS RISK may KILL your retirement life?
- Gold Volatility – Based on 43 Years of History
- 5 immortal features of Equity Market Investors
- Inflation ILLUSION!!