We at Wisdom Wealth Consultants discuss the portfolio of our esteemed clients. I like to share with you the experience I had with one of my client family who are doctors with two lovely kids.

We discussed portfolio, markets in general and other regular stuff. The gentleman Dr Ajith who is a well known physician in Kerala has a liking for stock markets and keeps on reading here and there to abreast himself of the current happenings. Looking at their myriad financial goals, risk profile etc. we had suggested them a mix of diversified, large cap, mid&small cap and balanced funds for long term goals and liquid funds for short to medium term requirements. The doctors were pleased with the overall scheme of things but they asked me, “Sam, don’t you think we should redeem our large cap funds which are underperforming and increase the allocation to mid&small cap funds??”

What’s happening here? They were taken over by the recent phenomenal rally in the mid cap space and were disappointed by relatively poor performance of large cap funds. I decided to explain the rationale by using some examples from sports.

“Dear Doctor Ajith , if you are a chief selector of Indian cricket team; will you select 11 batsmen, 11 bowlers or a balanced team of batsmen, all-rounders, wicketkeeper and bowlers??? Doctor Ajith started laughing, “Good one Sam, I got your point.”

I continued, “Now let’s look at recently concluded IPL. Dhoni, Kohli, Malinga are superstars but couldn’t perform to their potential in IPL. Will you immediately drop them. No, right. Then why do you want to redeem funds which have recently underperformed but have been consistent wealth creators.” The clients were convinced by now.

But was not done. “Sachin Tendulkar made his debut in 1989 against Pakistan when he was only 16. Tendulkar had to face legendary Imran Khan, two bowlers who went on to become all time greats Wasim Akram and Waquar Younis and one cunning leg spinner Abdul Qadir. Tendulkar was largely inconsistent but showed promise on this tour of Pakistan. Indian team management also persisted with Sachin Tendulkar as they believed in his ability and talent. And the rest as they say is history.”

We had a nice coffee and snacks afterwards when they termed me as their financial doctor.

Remember: Form is temporary class is permanent.

Happy Investing !


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