Strong Core for flourishing branches.
WHY are we so GUNG HO about MWT. Mystic Wealth Tortoise.
We at Mystic Wealth believe that Slow compounding done on Index itself is the ultimate and probably the ONLY viable strategy available to retail.
Now of-course you might feel that we have a product to sell and therefore commitment bias ensures that we see only green.
However that’s not the case, as you are all aware that we have our signature product M.W.M (Mysticwealth Momentum) which has better margins and ticket size and therefore our incentives are aligned to pitch that and Not this.
Lets break it down why M.W.T is the Ultimate and probably the ONLY viable strategy for Retail.
Behavior gap.
Foremost reason why retail returns do not match the instrument’s quoted return is INABILITY TO STICK to it through thick and thin.
So while small cap and mid cap mutual funds claim to have generated 17–20% CAGR returns, they went through a 70% draw-down to achieve that. Majority (99.9%) of retail threw in the towel and so their return CAGR is no where close to the much talked about compounding.
Don’t let any GURU belittle you about your inability to withstand that kind of pain. Its functional equivalent to blaming the dead pilot after the crash.
Pain Threshold.
People’s threshold of pain is a lot closer than they themselves imagine. Not sure why that is the case, Over-confidence bias, EGO, machismo, external scorecard, call what you may, point is if you think that you can withstand a 30% draw-down, be assured that you would be panicking BIG TIME at 20–22% levels.
Now that we know that our pain threshold is a lot closer than we think.And behavior gap is why retail returns never match the very instrument they invest in.
We REALIZE the importance of a ROBUST Product which has draw-downs within the pain threshold of the most conservative of Investors.
We discussed here how trend following cuts down the draw-down BIG time compared to BUY and HOLD.
22% cut from a back breaking 70%.
Now add another flavor to it. Asset Allocation. And this is where M.W.T becomes a Potent weapon.
Nifty Junior 70%, Debt: 15%, Gold: 15%
The already stemmed draw-down of 22% becomes paltry 12% due to reduced exposure to equity and other asset classes kicking in.
And so you can safely take all your money out of your FDs and put it in this SLOW compounding vehicle where you can expect index like returns at fraction of its downside.
Please register here at our micro site at smallcase for a hassle free access.
At Mystic Wealth we strongly feel that An index strategy should form the CORE of your portfolio while you dabble with ALPHA generation with remaining part. Its called the barbell strategy, we delved into it in this blog.
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Email us at info@mysticwealth.in for questions, comments and feedback.
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