Monthly Archives: March 2021

While eating cherries, why do you pick the best cherries first?

Dear Patrons,

While eating cherries, why do you pick the best cherries first?

Let me put this in perspective, on hotel websites; they present themselves in the very best light. Only beautiful, majestic images are shown. We of course know these are professional photos but still we fall for fantastic photos. What the hotel did is called ‘Cherry-Picking

Same happens with brochures for cars. Brilliantly designed brochures makes you to buy higher version of that car. How about real estate scheme brochure? It just shows you wide roads, ample space and expensive cars in the parking. Realty is different in both of the above cases.

When it comes to investing, financial decisions are executed purely on ‘Cherry-Picking’. Why past performance and high return tactics sell easily? By showcasing an outstanding performance, it becomes easy to sell a product but unfortunately a communication about the hidden side of the product is hardly disclosed. Investors fall in to trap of Decorative graphs and fancy literatures that sell easily.

A smart investor should understand that when market goes up, NAVs of schemes too increases.  However investors should compare the performance with benchmark and peer group schemes. By doing this, you will get eye opening outcome. Hence Portfolio review becomes more important than long term hugging to a specific scheme.

Test your Investment decisions time to time. You may have wanted to pick a best cherry but you may end up with bad cherries. So betterment of your wealth, keep testing your own decision making process.