We are all suckers for good stories and narratives. As Noble Laureate Robert Shiller writes in his book, narratives shape our world.
But narratives are more than mental shortcuts for the real world – they increasingly are the real world.
One of the most common and dangerous narratives in the world of investing is that of star fund managers. The fandom of star fund managers, in some cases almost reaches the idol worship. In India, we have managers like Prashant Jain, S Naren, Santosh Kamath, Neelesh Surana, among others who have cult-like fan followings. Look, I have nothing against these fund managers and in fact, one of the ELSS funds that I have invested in is managed by one of these guys. Credit where it’s due, most of these guys have created phenomenal wealth. But past results are at best a weak guarantee of future performance.
What seems absurd to me is that most people lap up anything these guys say without thinking critically. At the end of the day, these managers will say anything to get more AUM. What’s scary is people place blind trust in these guys even if the data says otherwise. Moreover, if you think they talk freely, that’s another myth. Anything that these managers say is heavily censored by their compliance departments and by the time words flow out their mouth, the meaning is comatose. If you think Prashant Jain or a Naren sit all day in their offices worrying about your welfare, then you are sorely mistaken. They are salesmen at the end of the day and making money for themselves and for you are mutually exclusive.
They’ll tell you well-crafted stories about the potential of the India economy, the untapped potential, and other such evocative BS.
Having said that, I love fund managers because the things they say are incredibly funny. Usually, what they say and what they mean are polar opposites. So, here’s a handy little guide of what fund managers and AMC CEOs say and what they really mean.
Indian markets offer good value despite the economic slowdown
Sir, please stay invested and don’t take your money. This economy is going to hell but if you take out your money, my bonus is gone. Saar, paisa mat nikalo!
This is a cyclical bear market in a structural bull run
Please help me keep my job while I underperform charing 2%. In the long run, we are all dead anyway or my boss will hire a new fund manager. I have 2 wives and 4 children. Please !
I am a contrarian
I bought some stocks and they have been going down for a while. I have to say some fancy shit to sound smart. At least, this way people won’t redeem and run.
It’s a stock picker’s market
This means absolutely nothing 藍 It’s just total air
The CNBC TV18 asked me to speak for 5 mins and damn, I am good at saying random
Investing in quality companies paid off
We copied Nifty 50 and just changed it a little. It worked and now I am featured in Moneycontrol. Yay!
It is a good time to build a long-term portfolio
If I tell you this is a bad time to invest, my wife and kids will be homeless.
India is domestic consumption story
Sounds really fancy, doesn’t it? Stating the VERY OBVIOUS in fancy ways is 99% of being a fund manager. Remaining 1% is closet indexing.
We pick competitive franchises
We do the same things, the rest of the other fund managers do. But I cannot say that can I? Have to sound fancy.
Our model is proprietary systems driven which the fund manager can override in times of stress.
We have a nice curve fitted backtest. Maa kasam, we don’t have a clue about how it will perform
Use large-caps as your core portfolio
Please use active-large cap funds because we make 1% easy. We won’t beat an index fund for sure, but I need the money.
Advisor zaroori hai!
I’m sucking up to distributors. I know most of these guys are scammy.
Volatility is inherent and investors should embrace it
Sir, please sir. Don’t cancel your SIP
Corporate profitability should improve over the next few years.
I have been saying this for the past 5 years. If profits don’t pick up, then my stock picks are buggered.
Index funds resemble a bubble
Sala, how do I compete with a fund that charges 0.05% when I am charging 2% for delivering the same performance. These index funds are taking all my money and I might be out of a job soon.
Indexing works in efficient markets
All my wife’s and kids’ money is in index funds.
We are seeing an incredible change in investor behaviour
Nope. People are doing the exact same dumb shit. But if I insult investors, I’ll soon be running a scammy website offering deluxe stock tips package to make a living.
We believe it’s a good time to pick mid and small-caps
Sir, no inflows in mid and smallcap funds. We need the money, sir. Otherwise, my bonus and my Maldives trip plans are gone, sir.
Quality is a bubble!
I didn’t buy HUL, Asian Paints, Berger, Dabur, Titan and my portfolio hasn’t even beaten Nifty 50. This is unfair, stock market is rigged. It’s a scam, it’s a bubble.
We follow a disciplined approach and pick quality stocks at reasonable prices
We do the same thing everybody else does. Mother promise!
We align portfolios to our core beliefs
I pasted a post-it note on which I had written my core belief and stuck it on my scheme fact-sheet. Core belief and portfolio aligned!
We hope investors choose our fund based on our philosophy and not recent returns.
I did something and our performance was good this year. I don’t know why and I swear this won’t be repeated. Even a broken clock is right twice a day. Please don’t pick my fund because of this, you’ll be disappointed.
You get more returns when you invest in tough times
Please don’t redeem your mutual funds. Please, please, God will bless you.
We expect interest rate go down
As if I know, where they’ll go. Lol!
We always put our investors first
Immediately calls the top distributors and says – I love you too.
Markets are disconnected from fundamentals
Mera stock is not going upar. Momma!
This post was inspired by this brilliant Behavioral Investment post. Also, thank you to a few people who shall remain nameless for recommending a few other gems that fall out the mouths of fund managers.