Now Reading: IIM Ranchi economist says don’t ask me for stock tips
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IIM Ranchi economist says don’t ask me for stock tips
An economics professor at IIM Ranchi has a simple answer for those seeking stock tips: don't ask an economist. Despite a surge in retail investing that saw a Rs 100 investment in the Nifty 50 grow to nearly Rs 270 between April 2020 and March 2026, the professor says nothing in an economist's training makes them good stock pickers.
Drawing on academic research, the professor offers three lessons: it is difficult to consistently beat the market because prices already reflect public information, investors who stay invested through cycles are rewarded over the long term, and diversification is the closest thing to a free lunch in finance. The advice: stop trying to outsmart the market, build a diversified portfolio, and let compounding work.
Indian Opinion Analysis
The core tension here is between the boom in retail participation, 96.4 million mutual fund accounts and SIPs crossing Rs 3 trillion annually, and the sobering reality that most active traders underperform. The 2000 Barber-Odean study cited found active traders earned 11.4% annually versus 17.9% for the market. For a typical Indian retail investor paying 0.5-1% in expense ratios and short-term capital gains tax at 15%, the gap widens further. The practical takeaway is regulatory: Sebi's move toward direct plans and lower-cost index funds directly addresses this asymmetry. Watch for Sebi's next consultation paper on passive fund expense caps.
Source: livemint.com
This story was synthesised by AI from the source linked above. Methodology and corrections.
