April 5, 2016

BUY&HOLD MF Returns and do you have balls of steel

Not only are we irrational, we are predictable at that. What that means is that cometh the same situation, we tend to make the same mistake again and again and again.
Lets look at the example. Lets just say for the sake of our example, that you are a bible thumping hardcore Warren Buffet buy and hold priest and you go all in with your Rs 1 lakh and buy Niftybees in the year 2005 and hold it till date.

Your 01 lakh would have become 3 lakhs, 63 thousand, that is a return of 12.15% CAGR. But wait a second, to achieve this respectable CAGR, you had to go through a ditch of 59.67%.

Well, I have come across many a stubborn, dogmatic investors, but to sustain a 60% draw-down you need…

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