HomeBusiness NewsFollowing Warren Buffett's advice blindly no good, says myth-busting investor

Following Warren Buffett's advice blindly no good, says myth-busting investor

Capitalmind CEO and ace investor Deepak Shenoy deconstructs and refutes popular investment wisdom like, for instance, one should invest early and take risks.

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By CNBCTV18.com December 17, 2021, 8:56:55 PM IST (Published)

Following Warren Buffett's advice blindly no good, says myth-busting investor
Most investors believe that expert advice is a way to success, but often such advice devolves into myths that may cause damage if followed blindly, tech engineer-turned-investor and entrepreneur Deepak Shenoy said.


In a blogpost, ‘The five myths about investing,’ Shenoy talks of myths that one should steer clear of.

Myths like investing early in life and taking risks are very different from reality, the Founder and CEO of Capitalmind said. In reality, a young person earns just about enough to get by and not much is left to save. Once older, not only is the salary higher, but the investor is also more experienced.

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According to Shenoy, the amount invested is the game changer. Even if the investor places a higher amount in a fixed deposit at a later age, he may end up ahead of someone investing early.

“If someone tells you that you need to take risks or that you need to invest early to make it, they’re both wrong. You can start any time, and in all likelihood, you will find a way to make enough money without taking insane risks,” Shenoy said.

Another myth is that investors should track their money every day, Shenoy said, adding that only a short-term trader needs to look at his investments on a regular basis. Long-term investments require time before being evaluated.

Breaking the myth around insurance, Shenoy said such policies are beneficial only when the investor has dependents who can get financial help when they are gone.

“When you reach a stage in life where, if you should die, your dependents are well taken care of, and your loans are already repaid, then you don’t need insurance,” he said.

While veteran investor Warren Buffett’s advice is timeless, following it blindly will not aid in growing your money, said Shenoy.

Giving an example, Shenoy demonstrates how Buffett’s quote, “Our favourite holding period is forever,” is used to prevent selling stock in a short period of time. However, some stocks are short-term investments and need to be sold when the investor gets better returns.

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Shenoy is not the only investor who has warned against following ace investors blindly without doing research.

Popular CNBC TV host Jim Cramer earlier said it was advisable to have your own opinion than getting burned by Warren Buffett’s moves on the stock market.

“If you like oil, you should own Exxon. If you don’t like oil, you should sell it. Don’t try to mimic Buffett -- you’ll just get burned,” Cramer had said.

There is also no truth in reducing equity investing as one grows older, Shenoy said. It is best to learn from your own mistake while making investments, he added.

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