Sorry for the late reply. Was a bit busy.
1 - Yes. Sector rotation can give a better CAGR than simple long-term compounding with fewer transactions. But as I have said, THESE ARE MY PERSONAL OPINIONS. And I am ‘not that smart’ to analyse and know which sectors will turn around. And waiting on the sidelines means not investing any fresh capital. The study of businesses is a continuous ongoing process in the background. And conviction is not a BLIND one. Long-term doesn’t mean you don’t track the businesses. The days of buying it and forgetting it are gone. You need to analyse each and every one of your businesses quarterly.
2 - Nowadays, it’s very difficult to differentiate between noise and knowledge on SM. We don’t know other people’s incentives. Yes. I know with a few technical indicators like RSI, etc., we can determine which sectors are trending. But again, you have to be on your toes to do it. One important point to remember is that - Retail investors are different from asset managers. At least I am investing along with my private medical practice. Asset managers are under pressure to perform every quarter ( which we retail investors don’t have to). Recently, I have reduced following everyone who is in asset managing/advisory, etc services. They have their own incentives. Nowadays, I try to follow individual investors who don’t have such incentives.
3 - It takes time to know whom to follow and whom to avoid. I am still learning that after three years of investing. Yes. For us retail investors, developing your own ideas is nearly impossible. We must depend on social media and prominent authorities for the stock names. But here, we have to avoid the HERD MENTALITY and AUTHORITY BIAS. Mohnish Pabrai is a huge proponent of ‘CLONING’. However, the stock ideas that you get from your authorities are only the first step in the stock filtration process. Then, you have to apply your own criteria for investing in them.
6 - I am slightly biased here as I have gotten excellent returns from SIP investing in PPFAS since its inception in 2013. YES. This looks like a good strategy to increase your SIP amount in, say, a kind of bear market and reduce it in a bull market.
But overall, your points are pretty much valid, provided you are a full-time investor.
For a part-time retail investor like me, it’s impossible to analyse and predict future trends and invest accordingly. At least, I am not that smart.
dr.vikas
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