Investment in stocks NOT a must for a complete and balanced portfolio

The Economic Times reports today

Investment in stocks must for a complete and balanced portfolio
'If you really want your money to grow - stocks is the only way to go'- Haven't you heard this umpteen times. Well, it holds true every time.

As compared to fixed deposits, investments in equity will pay 26.5 per cent higher returns in 5 years. Even for a longer term, investment in stocks pay higher returns even in comparison to real estate and gold. 

Investments in equity WILL? pay 26.5% higher returns in 5 years? Well there you have it... Economic Times India writers know exactly what equity market returns will be in 5 years.  And if they know what equities are going to do, why are they writing newspaper articles, they should be hedge fund managers.

They trot out Infosys and Tata Steels.  Tata Steels share price performance is shown above.  What if you were unfortunate enough to have bought tin 2006 and sold in fear in 2009? You would have a significant loss!

That is the issue that unsuspecting investors in India are learning for themselves.  Stop listening to the mutual fund industry marketing buzz and start being wise investors.

There is a time to buy equities and when that time comes, I will invest agressively.  Today is not that time.
Success in the markets requires patience and waiting for the fat pitch.  Investors entering the market today are likely going to be disappointed as opposed to investing in secure investments.

The Psychology of Investing & the Road Less Traveled

The news is relatively benign.  The ISM looks good.  The market held up well today despite a horrible unemployment number.  The economy could pick up steam as further stimulus makes its way through the system.

These are some of the thoughts going through the mind of most institutional and retail investors.  See, if you invest with an institution, there is a portfolio manager managing your money.  I used to be a portfolio manager at a large institution no longer in existence.  No it wasn't Bear Stearns.  I walked away from the rat race many years back.

The portfolio manager in his heart of hearts knows we are screwed.  But it is heresy to have a divergent view in an organization.  Particularly if you are a mutual fund manager, how can you not be bullish now?

I recently attended  a Deutsche Bank institutional conference.  Amazing how bullish the crowd was and the one hedge fund manager that was bearish was apologetically so.

These are the sentiments that tops are made from.  There was 2% bullishness at the bottom in March.  There was 92% bullishness recently.  The majority of investors are wrong at the turns.  Success in investing requires taking the road less travelled.