SHOULD RETAIL INVESTORS MIMIC CAREER FUND MANAGERS?

A recent article doing the rounds on social media gained attention for all the right reasons. It meticulously explained how many stocks an investor should own, discussing diversification strategies, sector allocation, and the mathematics of portfolio risk reduction.

- DHIRENDRA KUMAR

The analysis was thorough, well-researched, and would make any finance professor proud. Yet there was something uncomfortable, not because of any flaws in the reasoning, but because of what it represented.

The piece exemplified a curious phenomenon that has emerged in the investment world over the past decade. Individual investors with day jobs, families, and lives to live have begun adopting the analytical frameworks and portfolio construction methods of professional fund managers.

This trend reached its peak during the recent bull market, when retail investors on forums and social media began discussing concepts like “factor investing”, “style boxes”, and “correlation matrices” with the same earnestness once reserved for professionals managing thousands of crores.