Good times become good memories, but bad times become good lessons

We just shared this on Twitter. When the markets are going up, we all feel a bit of FOMO (fear of missing out); after all, we’re humans. But acting on that FOMO rarely ends well. Unless your primary job involves looking at the markets, it’s best not to worry about market movements, especially in bull markets. Building a simple, diversified portfolio and then doing something useful in life is the best thing for most investors.

Mid-caps and small-caps have risen spectacularly in 2023.

Whenever there’s a lot of exuberance, it’s wise to remember this quote:

“Good times become good memories, but bad times become good lessons.”

Whenever something goes up, retail investors chase performance, which ends in disappointment and tears.

Nothing works all the time. Trying to chase performance and timing is a fool’s errand for most people. Diversifying across asset classes and sectors and doing something productive in life is the best things for most investors😬

Investing is a constant fight against human nature. You will be constantly tempted to chase performance and tinker with your portfolio. But with a few exceptions, the more activity in your portfolio, the lower the returns.

Resisting the pull of fear and greed is what makes investing easy in theory but a nightmare in practice. This is why you get paid a higher premium compared to just keeping all your money in a fixed deposit :smile:

Think of it this way: if you ignore market noise, stop obsessing about market moves, have a sensible asset allocation, and have a long-term perspective, you will automatically be better than 60-70% of all investors.

As Morgan Housel says:


What’s the source of real estate returns? You are saying real estate doubled from 2019 to 2021. And 2.5 times from 2019 to 2023??


@Bhuvan So this is Nifty’s the 8th consecutive year with positive returns . Even 2015 was marginally negative , wonder how long will the trend last

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Thanks @Bhuvan
For insightful article… as always.

“Asset class returns” Table last row is “Diversified Portfolio”. As per foot note it is composed of 5 asset classes. However how I couldn’t locate information about how frequently or on what conditions it was re-balanced.

Would like to understand more about frequency (Say quarterly or semiannually) or condition ( say difference is more than 2% or 20%) used to trigger the rebalance.

Source is given below the table no? White Oak MF

That “source” mention appears to be insufficient to learn/understand the methodology used to arrive at these numbers…

…which makes these tables a lot less impressive :confused:
(as even small tweaks/filters in the methodology used, can even reverse the conclusions!)

It is good that these charts have properly labelled axes
and the source of the observations is also mentioned.

We should also add links to the original source wherever possible
so that interested folks can dig deeper and understand the methodology
or even review/analyze the raw data at the source wherever available.

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The Whiteoak MF guys have used the RBI home price index. Real estate prices are always an imperfect proxy at best.

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These are all simple calendar year returns.

It’s just historical index data, nothing too complicated. PS, you can download it on Kite :slight_smile:

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