Investing tips from the festival of Holi!

Here are 5 interesting lessons that the festival of colours teaches us from investment perspective

Mar 09, 2020 11:03 IST India Infoline News Service

Holi, popularly known as the festival of colours, joy and happiness brings with it the indulgent memories of childhood. Holi has many facets to it and apart from smearing colour on each other and tossing water balloons, the festival of Holi is also celebrated to honour the triumph of good over evil in the form of Holika Dahan. Stock market investors can take some smart cues from Holi celebrations. Here are 5 interesting lessons that the festival of colours teaches us from investment perspective.

An array of colours represent the significance of diversification
The festival of Holi has no essence without the multitude of colours; can you imagine playing Holi with just one colour? The various colours of Holi represent diversity. Similarly, from an investment point of view, diversification is the key, as a single point approach can be too risky. In order to reap the benefits of investing, resort to the approach of diversification for your portfolio.

Holika Dahan signifies destroying  the evils in our portfolio
Most Hindu festivals embody the victory of good over evil and the Holika Dahan represents the burning of the evil Holika who tries to get Prahalad consumed by the flames. Did you know that we all have the Holika in our investment portfolios? They could be the laggards or the underperformers or the villain stocks. They consume capital but don’t give returns. It is the time for ejecting such Holika from your investment portfolio and infuse fresh ideas.

Lord Narasimha reminds that it is important to comprehend the risk in our portfolio
Legend has it that King Hiranyakashyapu was so powerful that he was almost invincible. The probability of any human killing him was next to nothing. Lord Vishnu assumes the form of Narasimha and manages to kill Hiranyakashyapu in mid-air by taking form of half-man and half-lion. The Narasimha Avatara represents the Black Swan event that all our investment ideas are exposed to. Quite often, we are not able to comprehend the risk that our investments are exposed to. The festival of Holi is intended to touch our chords of humility and remind us that the best of investments can also be fallible.

Prahalad signifies the importance of diligence and conviction
Prahalad represents a variety of virtues. He is devout, he is diligent and his conviction in the Lord is unflinching. For investors, Prahalad gives us the all-important lesson of conviction. More often than not, we fail to make profits in the market because our convictions tend to falter. That is what we need to be cautious about as investors. Making your investments grow is all about conviction and like Prahalad we just cannot let it falter. That is an important reminder on the occasion of Holi.

The festival of hope and optimism
When colour filled balloons are thrown at people, the normal refrain is “Bura na mano Holi hai”. The message is that the festival is meant for fun and not to hurt anybody. It is an invitation to fun as well as an apology in advance. For investors, this has two implications. Firstly, like in Holi, we need to play our investments safe and not expose our portfolio to too much risk. Secondly, the whole idea of investing is to hope for a brighter tomorrow and also live to fight another day. It is this hope and optimism that the festival of colours instils in every investor.

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