Currently long-term investors have started playing a dangerous game wherein they are selling mutual funds to buy shares. The idea is not bad, but the market condition is wrong. The transaction is selling something which is high to buy something which is higher. Investors are not getting any bargain. In fact they are selling a low risk asset to buy a high risk asset. It is like getting down from bus and sitting on a sports bike on a wet and slippery road. Most investors have started comparing mutual fund returns with individual stock returns which is wrong. One cannot compare fruit salad with mango. Mutual funds are portfolios which try to optimize returns by diversifying risk. When you look at standard deviation (which no one does) of individual stock against that of mutual fund, the standard deviation of mutual funds is much lower as compared to that of stocks (standard deviation is a measure of risk)

I would like to advise this community of investors to avoid this dangerous game. Have clearly differentiate fund allocation between stocks and mutual funds. Money set aside for stocks must not flow into mutual funds and money allocated to mutual funds must not flow into stocks. Those feeling stocks are born to rise and bluechip companies are there forever please have a look at the below table. The below stocks were investor’s darling and everyone wanted to own them.

Avoid the trap of selling low risk moderate return asset for high risk high return asset. The day market corrects you will not get a chance to sell even a single share of few low quality stocks.