Paying Attention To The Right Things

Does your investing mind spend too much time on investments that don’t really matter? Do you give enough attention to the right ones?

- Dhirendra Kumar

To a parent trying to get a child to study productively, the most irritating thing is the child’s propensity to pay less attention to the subjects and theparts of the syllabus that matter more. Perhaps, as investors, we are also guilty of the same lopsided focus. At a broader level, I often come across investors who are obsessed with their equity-fund performance and yet when you look at their entire asset base,equity will be a few per cent because much of it is in fixed income and property!

Even when it comes to mutual fund investing, one of the problems that most of us create for ourselves is that we think that choosing a fund is the most important part. In fact, not just the most important, but the part that must be done first. The entire activity of mutual fund investing gets reduced to choosing funds. Unfortunately, this sets us up for failure, and if it does get success, then that success is accidental and we don’t actually know why and how we succeeded. It’s just luck.

This odd obsession with the irrelevant parts of investing leads us to give undue attention to the parts of our investments that can play only a small or an irrelevant role.