Cambridge dictionary has this as the meaning of the word popular ; liked, enjoyed, or supported by many people’. Obviously, most of us love what’s popular. Popular is also generally a safer option, something which has to be attractive to a large section of its target group (TG). And that’s exactly where the problem lies. It is built on the foundation of avoiding risk or trying to venture out of the comfort zone. Do a quick check of what’s popular in most fields (particularly your own) and test this hypothesis. Disclaimer : there might be a few exceptions.

Popularity and marketing are great partners

The other distinct character of popular is the marketing muscle behind it. Don’t get me wrong. I have serious respect for marketing folks. However, marketing does take your focus away from evaluating a product/ service purely on quality.

Popular in Investing

Especially when it comes to investing, popular products, which are marketed extremely well, can end up being poor choice. As I often say, investing should be BORING. Most investing ideas should take time to grow on you. We live in world, where we know of investment products more for their ads than anything else. Quick reminder: IPL. and make no mistake it’s not easy to get enamored by some of them. They have the best of marketing brains behind this.

Popularity in investing is a function of recent returns

Good recent returns obviously are an easy ‘sell’ and can be packaged well. As we often repeat during our portfolio recommendations, investing primarily based on great recent returns results in sub-optimal outcomes. Tech in 1999, Infra in 2006-07, Equity in general in 2007 and 2021, Mid and Small caps in 2017 are few examples of this.

Bottomline

Most of us suffer from FOMO. It’s only human to do so. That’s one of the biggest reasons why it’s difficult to avoid what’s popular. So quick checks in investing : be wary if an investing idea is suddenly backed by marketing blitzkrieg, appreciate simple products , look ahead and believe in cycles

Disclaimer: Any calculation shown in this post is only for illustrative purposes and based on prevailing tax laws and the past performance of a fund or investment is not an indicator of it’s future performance. The data used in this presentation has been taken from several sources. Neither BuckSpeak nor any of its employees or Subir Jha vouches for the authenticity of the data. Investing in mutual fund comes with market risk. Please read all Scheme Information Documents (SID) /Key Information Memorandum (KIM) and addendums issued thereto from time to time information and other related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund. Investment should be done in consultant with a financial planner/consultant, who would recommend products aligned to your needs and risk profile. There are no guaranteed returns. Neither BUCKSPEAK NOR ITS EMPLOYEES, makes any warranties or representations, express or implied, on products offered and would be responsible for any losses from these investments. The company earns commission from Asset Management Companies when the user buys mutual funds. However, the recommendations on funds is not influenced by the commission earned.