The problem with porn is it gives you wrong ideas, and wrong things to hope for. So if you have read the following in the ‘financial media’ it is time you made some corrections:

1. You can invest like Warren Buffett: Well you cannot invest like WB, simply because you are NOT Warren Buffett. Over the past few years, the world’s greatest investor (presumably, and in the public space) has come to be worshipped. Warren Buffett has amassed enormous wealth but his methodology is misunderstood. The myth of the simple investor from Omaha who just picks “value” stocks has driven an entire generation to fall for the simple investment, and buy and hold philosophy. Worse, it has created a  myth that they can replicate what Buffett does.Hold your horses — Buffett is not a simple value-stock picker. He is not a fund manager, he is a business owner – you can compare him to Mukesh Ambani and not to Naren Sankaran. What WB has built is a very complex portfolio and it resembles something that very few big fund managers can even come close to replicating. A retail guy would spend his LIFETIME just reading about WB’s investments and  personality.Berkshire Hathaway Buffett’s firm, acts as a multi-strategy hedge fund! IT engages in sophisticated insurance underwriting, re-insurance, buy and selling of businesses, owning some businesses for life,  complex fixed-income strategies, multi-strategy equity approaches and tactics that more resemble a private equity firm and not a simple PE based buying and holding! Replicating this isn’t just difficult — it is  impossible.
2. You can beat the market: The Indian Indices are poorly constructed – which has made it easy for Indian fund managers to have some simple Index beating strategies. Avoiding PSU shares, loading with banks, etc. have worked from time to time. However, if you take the total return index – the story is likely to be different. If you are an equity investor – and invest for getting a return you are better off indexing. However, people like to buy many funds, invest in direct equity, and do a lot of things which they can talk about at a party. So if you want topics for talking at a party, do all that otherwise a simple indexing strategy will work. Now I know that the next question will be – Icici Pru discovery, Birla, FT – all have index beating performances, do they not? Yes, they have but it is your call whether you want to take the risk to get the small differential. In my mind, there is NO NEED.
3. You have to beat the market: All you need is inflation beating return – and that an Index fund will give you over a period of time. Even in this period the earlier you enter the market and the longer you stay you will get better returns. No doubt about that. It is important to reduce fees, but not at the risk of oversimplifying the portfolio to the point that it is not protecting you against inflation, and the whole action is counterproductive. The concept of passive investing is built on useful and sound principles, but often overlooks the fact that portfolio management is a process, not a passive undertaking.
4. You have to be a trader or an Investor: Wrong. A part of you could be a day trader, a position trader, a long term investor, a value investor, a growth investor, a direct equity investor, a mutual fund investor – and still achieve your goals. Do not be caught in a dogma and get trapped in an image that you have created for yourself!