One young girl called me to say that she is going to change her adviser because he lost money for her. Great I said. She sent me the details..yes of course she had lost money in the past 7 months. About 1.8Lakhs. Not a small amount at all..on an investment of about Rs. 15 lakhs.

Hold on for a minute..she had invested about Rs. 12 lakhs about 33 months ago. It had gone up during the Na Mo frenzy, and then she had made a loss, but it was still worth about Rs. 15 lakhs – a cool 25% up from her starting portfolio. I am not saying whether this was an appropriate adviser, or an appropriate strategy for her. She was ACTUALLY cribbing about the FALL IN HER PORTFOLIO. At the peak this portfolio was worth Rs. 16.8L and now it was worth Rs. 15 L – she was ANGRY that the portfolio had fallen off its high – and she perceived that as a loss. WELL, LOSING MONEY WAS GOOD FOR HER.

Here is a girl who had to be kicked into a start for investing in equities – direct and through mutual funds. She had NO BUSINESS REVIEWING her portfolio without knowing how to do that. Some of us do that for a living. Her adviser had bought her good funds, she had bought him good equity stocks, some good funds, and the result was there to see.

If as an investor if you start thinking that ANYTHING from the high market mark that your portfolio set in a bull run as the best, and any fall from there as a loss, you are wrong. Absolutely wrong. Market performance evaluation is always done against a benchmark. And please do not keep changing your benchmark. One day you compare your adviser to IPru Discovery fund, the next year to Hdfc top 200 and the year following that to the index!! this is so convenient and stupid. So wake up and smell the coffee.

Also stop investing for periods less than 10 years. So do a sip with a 10 year plus perspective. Do not do an appraisal every few months – even 33 months is too short a period to judge a good fund manager. Actually this lady, let us cal her Priya – she had no investing knowledge. She just got started in investing about 5 years ago and keeps doing some sip and stock picking. She is smart, educated, knows that markets fluctuate..but has such pangs for ‘performance’.

What did I tell her? 

“I am happy that YOU lost money. You deserve to. You lose money ONLY because you made money in the market. If you had continued to keep money in bank fixed deposits, YOU would never have lost money. Now go back to 2011 and see what would have happened if you had kept all your money in bank fixed deposits, YOU would have earned less. Much lesser, and would have paid taxes on the interest.

but surely YOU would not have lost money. No go hang.

Or continue your sip investments and learn to do appraisals. The way you have done it is wrong….


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  1. Also, the true benchmark is inflation. Nifty be damned. If you beat inflation you are richer, if not you’re poorer. Simple

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