I think Harsh has answered this well, so I’ll just leave this meme here. I’m not saying that I’m the jedi on the right (far from it!), but I’ve been there long enough to acknowledge that there is a ring of truth in this meme.
Translating into English, the person the left and the one on the right do similar things, but for different reasons.
The person on the left side sees all those factors you mentioned (so many things, so many con calls, so many annual reports …Then different investing books and continuously following different parameters for different industries, then global markets, macro factors like interest rates, unemployment rates, updates on that) as too complicated and so does some simple thing e.g. Index Funds.
The person in the middle sees all the complicated factors you mention as a challenge and exciting, and tries to solve for it. And this often has a not-too-great-outcome.
The person on the right realizes that there is actually a lot of noise. S(he) knows that a few parameters have an outsized impact on outcome. E.g. such a person may realize that asset allocation plays a much bigger role in wealth creation than stock picking. And then voila, goes for…Index Funds.
(The index funds example is just a crude illustration, to bring the point alive).
| Subscribe To Our Free Newsletter |
