Don't Just Blindly Follow Maxims

The given investment maxims have proven relevant most of the time, but they are not carved in stone. Investment strategies should be tailored to individual situations

- LARISSA FERNAND

I got the idea for this article from Abhishek Singh at DSP Mutual Fund. The fund manager of DSP Top 100 and DSP Equity and Bond, he recently shared some really interesting facts. The focus was on investment platitudes that we just take for granted. Here they go and the facts:

High Turnover Is Bad: But Peter Lynch had a turnover ratio of 300 per cent during the early years of managing Magellan Fund at Fidelity Investments.

Concentration Is Bad: But Charlie Munger had a 4-stock portfolio (Wells Fargo, Bank of America, Alibaba Group, U.S.

Bancorp).

At the end of 2023, Berkshire Hathaway owned about 6 per cent of Apple, which amounted to about 40 per cent of the conglomerate's total value. It was about four times bigger than Berkshire's second biggest public stock holding, Bank of America.

Concentration Is Good: But diversified indices beat the performance of most of the active fund managers.

Never Sell Quality: But Walt Disney peaked at around $200 in early 2021. Currently, it is back at 2015 levels. The stock split history is not the reason.

Dividend king Coca-Cola has underperformed the average returns of the market over the past decade.

Value Always Wins: But Seth Klarman's Baupost and Warren Buffett's Berkshire Hathaway are just about even with the S&P 500 over the past two decades.

The Last Decade Belonged To Growth: But a vast majority of the best-performing funds in the decade were value-oriented offerings.