Is your EGO winning or your Portfolio ?

Is your EGO winning or your Portfolio ?

The Zomato story is a stark reminder: sometimes, stubborn narratives blind us to reality. While established giants like HDFC Bank underperform, “unconventional” picks like Zomato soar. So, what’s the lesson? It’s time to consider letting go of your ego and embracing the potential of mechanical, rule-based investing.

The Narrative Trap: When everyone shouts “buy HDFC Bank!”, it’s easy to get swept up in the narrative, ignoring price trends. But remember, performance speaks louder than popularity. Zomato, once derided, is now outperforming. Don’t let narratives cloud your judgment; focus on objective data.

The Power of Rule Based Systems: If a system can tell you which “horses” are leading the race, why not ride them? Many investors struggle to accept that mechanical strategies might outperform their stock-picking skills. But clinging to ego can harm your portfolio.

It’s Not About You: You don’t need to prove you’re a great investor. Your goal is to make money. If external managers or index funds consistently outperform you, swallow your pride and switch strategies. Think of it like seeing a doctor: wouldn’t you seek professional help for faster recovery?

The Numbers Don’t Lie: Statistics reveal a harsh truth: 80% of portfolio, fund, and PMS managers underperform the index. Weekend Investing’s own strategies consistently beat the index over the past seven years. The evidence is clear: mechanical approaches can be powerful.

Stop Fighting the Trend: Give up the battle to prove your investing prowess. Instead, focus on what works. Embrace data-driven strategies and let go of ego-driven choices. Remember, your financial well-being, and your family’s, hinges on smart decisions, not self-justification.

Check out the detailed video on The WeekendInvesting App

WeekendInvesting Strategy Spotlight !

Rolling CAGR denotes how the CAGR progresses over a period of time. 3 year rolling CAGR denotes the CAGR corresponding to the latest 3 years at any given point in time.

Below is a chart comparing the 3 year rolling CAGR of Mi MT Allcap versus the same on its benchmark, the CNX 500 index. As on 20 Feb 2024, the 3 year CAGR on Mi MT Allcap stands at 42.4% while the same on CNX 500 sums up to 17% (an outstanding beat)

Right since going live back in 2018, Mi MT Allcap’s 3 year CAGR has hovered in the range of 35% to 55% whereas the same on CNX 500 has oscillated between 10% to 30% thus maintaining an extremely healthy lead with solid performance.