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Commentary

LinkFest #5 – Myths, advice, caution and all…

Let your money work for you (Equitymaster)
The three D’s of investment – Diversification, Dollar Cost averaging and Discipline are touted in this equitymaster article. I beg to differ on a few things: Don’t use “Dollar cost averaging” – Rupees are more likely all that is available to you. Cost averaging is part of Systematic investments – but average with the right investments, not dumb ones. Diversify, but not to the extent that your returns are bad because of diversification – buy good companies or mutual funds. Don’t buy twenty diversified funds! That’s way too much diversification for you, plus it doesn’t work really. And disciplined investing – that’s very much recommended.

5 common investment myths (Personalfn)
A good article about what people tend to believe and the ground reality. That Rs. 10 is not a better buy than a Rs. 100 fund (I agree), long term is not necessarily good, investments and risk taking abilities are individually unique, SIPs are not necessarily good (I agree), and that you can actually diversify too much.

Unshining India, (Dhirendra Kumar, Value Research Online)
A very interesting take on how people are going berserk just led by the “India shining” story. Everyone and his aunty is buying property because they feel that the economy cannot go down. Led by the lucre of a booming economy, investors are putting money down based on future calculations of income, earnings, GDP growth, whatever – and additional fuel comes from TV channels, fund managers, investment advisors and the like. My thumb rule for you is: When people tell you “if you don’t invest now, it’ll be too late”, that’s the time to stop and play some gully cricket. But read this article – I wish Kumar had expanded a little more, and pushed his point through rather than sitting on the fence.

MF vs. Sensex, Sensex wins? (Economic Times)
Turns out mutual funds have underperformed the equity indexes this year. This is the case with the US over the last few years too. Is India now becoming a mature market?

Earlier Linkfests: 1, 2, 3, 4