I can choose the headline first and then fit the story! Confirmatory bias we call it. If i decide to do the following stories, I can :

1. Sell Infrastructure funds, they have underperformed

2. Buy Infrastructure funds, they have underperformed, but now they will start performing

3. We need infrastructure so buy infra stocks instead of infra funds

4. ditto for foreign stocks….

any story can be true, all you do is to choose the dates on which to do the story. The same people who say ….funds have not performed can do a story to show how well a fund has performed by doing two things:

a) change the dates (no reader asks why did you end the year on 17th April, does he?)

b) calculate the returns vis-a-vis the benchmark (MSCI for an international fund?)

c) by seeing the returns on a SIP basis

d) compare it to the dollar index

e) argue that you should accumulate because after all India cannot continue to outperform always…

Ultimately do the story….and then fix the headline!!

when to buy and when to sell a sector fund is something on which I can do a PhD. Only thing is it is like being a male gyneac! I have never believed that I need a sectoral fund in my portfolio. I must share this though..

I was in a fund manager meeting..where the FM was asked ‘Why did you buy shares of Hdfc Bank’…the FM told me ‘Because I sold shares of State Bank of India’. L O L.

It was a fund which was supposed to invest in companies which was benefiting by ‘E-commerce’. I laughed…and then the CIO told me a long winded stupid story. Obviously I am not saying anything more. I then met another high level guy in the fund and said ‘At Rs. 5 Nav has it reached the nadir?’ . He said ‘Will you invest?’ I said ‘You know my views on your portfolio, do you not?’ He said…hmmmm yes..but my advice is please buy some units..then you can average!!

The Nav did fall to half of the then NAV….obviously this is a 1998-9 story….and most of the players of that era do not remember me..hence this story.

5. ditto for Indian stocks

Then what do I do in the body of the story?

We will discuss that later!