“Be A Contrarian!”
Date: Friday , February 28, 2003
WHO: KUNAL KAPOOR, editor of Morningstar's Morningstar Mutual Funds, a semi-monthly newsletter. Prior to this, he was a mutual fund analyst for Morningstar Investment Services, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Kapoor joined Morningstar, Inc. in May 1997 as a mutual fund analyst and has been quoted in the Wall Street Journal, Financial Times, Bloomberg, and the New York Times. He has also appeared on CNBC, CNN, and CNNfn. Kapoor holds a bachelor's degree in economics and environmental policy from Monmouth College, has completed the Chartered Financial Analyst program, and is a candidate for a master's degree in business administration from the University of Chicago Graduate School of Business.
STRATEGY: “It helps to think contrary to the flow of the market,” says Kunal Kapoor. He has seen people throw good money after a bad product, simply to keep up with the Joneses. “Investing, whether as an individual, or as a corporate, is about meeting goals that are specific to only the investor’s needs. The goals cannot be general,” says Kapoor. If bonds are hot this year, it would be wise to look at stocks, says Kapoor, as it will be only a matter of time before stocks become hot again.
PORTFOLIO: As an analyst, Kapoor doesn’t share information on any particular stock or investing tool, in keeping with his role to be impartial. But he advises investors to think for their own needs, and not in terms of how the market is moving. “Short-term and long-term products are necessary in the portfolio mix,” says Kapoor. “Though how many short-term and how many long-term are entirely upto your needs.”
ADVICE: “Investors should be looking at their specific needs, goals, and the products-mix,” advises Kapoor. “This helps you invest sensibly, rather than be swayed by the market emotions.” Kapoor quotes Warren Buffet as a very good example. “He invests in areas where others fear to tread, yet is making very good progress. This contrarian attitude helps.” Also, keeping the portfolio mix flexible and open to change over the years is a good idea. “If you are in the thirties, a lot more equities now would be a good idea, but if you are older, start thinking about your retirement fund.”