May 21, 2023May 21, 2023

Have realistic expectations from your investments

Posted By: investingsignal

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Even as billions of dollars diverts toward firms scoring higher on environmental, the funding costs for bad actors has hardly budged

Kirti, a selector, wants to make money by backing a batsman based on his long-term performance. After scrutinising the statistics of several batsmen over a hundred matches, he decides on one. However, he gets upset when his chosen player doesn’t perform well in the next match, and in fact the entire series. He overlooks the fact that the other batsmen have fared equally poorly.

Despite the chosen batsman still having the best average performance over a hundred matches, Kirti’s disappointment doesn’t abate. He unrealistically expects the batsman he has backed to perform well every time, forgetting his initial strategy of backing a batsman based on his long-term performance.

Cut to investments. I narrated this imaginary story to our client Radha. She was going through the status report on her investments started six months ago. She expressed unhappiness at their rather low returns and enquired whether they needed t

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First Published: May 21 2023 | 9:52 PM IST

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