Investment Myths/Syndromes...

        It is a common knowledge that most people loose on equity trading. Yes, if they resort to investing in lieu of trading, then most people earn. I am listing certain myths around which so called investors revolve their investment( actually trading) strategy......

Currency is an asset class

       This is a myth. Currency does not grow on its own, rather it looses its value if not invested in some asset class due to inflation. However keeping money as emergency fund is desirable. Money even invested/kept in saving a/c, FDs looses its value post tax and inflation.Various asset classes like equity, bullion, real estate,debt funds, art work, wines etc may be mentioned here for context .In present economic conditions, equity is only asset class which is giving returns post tax & inflation.

Booking Profit Syndrome

        Most of the investors( actually traders) have no capacity to digest profit but have ravenous apatite for loss.If a scrip has gone up by say 20%, they would book the profit but would not contain the losses in some other scrip.We do not sell businesses after taking initial profit in the first year itself, rather nurture it as milch cattle to get continuous profit and have a sort of bonding that the same business becomes our identity. Same should go with the stocks purchased after deep research. And where do we take this money? If it is required for some obligation, fine but to purchase some other scrip based on tip or additional purchase in some loss making scrip, what are we doing? We are leaving a trusted and efficient horse to ride an untested or already ailing horse..... a little consideration will prove my point.

Averaging the Loss Syndrome

          In a carefully selected portfolio of 10 scrips, if 6 are giving above average returns and over all returns are also above average, the portfolio is treated to be performing exceedingly well. However the portfolio is expected to be dynamically managed. If out of these 10 scrips, one odd scrip is in loss, it is absolutely normal. If growth story is intact, this is bound to regain but buying the same scrip more to average the loss may prove to be disastrous. My ailing horse argument holds good here also. We should rather book the loss then to put more money into the scrip.In a long term investment story, one needs to worry only if a scrip has gone down more than 40% in an otherwise okay investment and growth scenario.If the economy grows, then most businesses will grow and do well, and what the investor has to do is choose stocks that have some better-than-average characteristics. If you keep doing so without getting carried away too much, then there's a very high probability that you will make excellent long-term returns which are essentially unaffected by the steady flow of supposedly important events.