Showing posts from May, 2022

What Is The Best Investment Of All?

“Mirror, mirror on the wall Who’s the fairest of them all?” The old fairy tale put a relative or comparative measuring tool in the minds of kindergarteners. We grow up with a competitive frame of mind and a desire to outperform. Superior performance is the primary desire of an investor as well even while doing asset allocation, choosing safety of some investments and risk in others. While traditional wisdom, possibly as old as the Snow White story where the Evil Queen asks “Who is the fairest of them all,” says that high risk is linked to high returns. The Guru, Warren Buffet however says, “High returns with low risk is the key.” This is true and applies to most asset classes. The speculative element in us, driving our investments pushes a good part of our investment towards the short-term momentum opportunities, buying when securities have run up, in the expectation that there will be others willing to pay a still higher price. The classic “Greater fool principle” that pops up