Rohit Chauhan, a seasoned investor and financial advisor took to social media platform X to express his views on the relative difficulty of active investing compared to other professions like engineering and management.
What Happened: On Wednesday, Chauhan tweeted that it’s “far easier to become an engineer or MBA or both” than to consistently beat the market as an active investor over a long period of time.
His claim, he said, is backed by his considerable experience in both fields, as he is an MBA graduate and a former engineer himself. He attributed this to two main reasons: the high degree of change in the markets and their relentless “meritocracy”.
“They (markets) will punish when you get it wrong no matter what you accomplished in the past,” he said in the post.
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Chauhan further highlighted that knowledge in other fields has a longer “half-life” and one can often coast along on the same body of knowledge for a longer period. However, in active investing, one needs to regularly reinvent their strategies. “In active investing, what you knew 5 years back is not sufficient and you have to regularly re-invent yourself,” he tweeted.
Why It Matters: Chauhan’s tweet sheds light on the pitfalls of generating wealth as an active investor. Unlike other professions, where anything short of a complete disaster will not cost you money, in active investing, a wrong move can lead to financial losses. He emphasised that significant learning and emotional resilience are required to succeed in the market.
Chauhan’s candid views serve as a reality check for those who view active investing as an easy way to make money. “If people knew how much learning and emotional resilience is needed to beat the market, there would be fewer active investors,” he concluded.
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