Here are 12 such myths:
1) Gold is dead money and can’t beat equities
The widely held view that gold is a useless “pet rock” that always trails equities is belied by 21st-century data, where bullion has actually outperformed every major stock market in local currency terms, including India and the US. In India, only about a quarter of NSE 500 stocks have beaten gold on a market-cap-weighted basis over this period, making a zero-gold allocation look more like a bias than a rational decision.
2) Gold has replaced equities as the only asset worth owning
The reverse belief, that gold is now the only game in town, also fails the data test, as five-year rolling returns show equities beating gold around half the time in India and the US, and more often in Europe and Hong Kong. There have been long stretches when staying invested in diversified indices would have delivered better outcomes than holding just gold, reinforcing that bullion is a useful diversifier, not a one-way ticket to wealth.
3) Diversification dilutes returns and is “di-worse-ification”
The claim that spreading money across assets drags down performance is challenged by DSP’s back-tests showing a 50–20–15–15 mix of domestic equity, debt, international equity and gold delivering equity-like returns with much lower volatility across markets. Outside the US, this diversified basket has even beaten pure local equities in nominal terms over 20-year horizons, with significantly lower standard deviation in countries like India and China.
4) High GDP growth automatically means high stock returns
Investors often assume that fast-growing economies will automatically generate high equity returns, but 30-year, inflation-adjusted data show several high-growth markets, including Malaysia, Indonesia, the Philippines and China, where real equity returns have lagged real GDP growth or even turned negative. Stock markets ultimately reflect earnings growth, capital allocation and governance, and these can decouple from headline GDP when shocks, policy errors or dilution offset macro strength.
5) India can realistically grow to a $30-trillion economy by 2050
The popular projection that India will be a $30-trillion economy by 2050 assumes an 8.9% real GDP CAGR for 25 years, a pace the country has almost never sustained even over shorter stretches. With long-term real growth closer to 6% and only one five-year period, ending FY08, approaching the required trajectory, DSP argues that a more plausible outcome is nearer $20 trillion even under optimistic doubling-every-decade assumptions.
6) Relentless domestic and foreign flows make markets one-way
Another comforting idea is that abundant domestic SIP money and foreign inflows guarantee an up-only market, but flow data across large-, mid- and small-cap funds show that flows tend to surge after strong returns and fade when performance weakens. Even with massive cumulative FII and DII inflows in recent years, markets have often stalled or corrected, illustrating that flows generally follow returns rather than dictating them.
7) Top-performing funds will remain top performers
Many investors assume that recent winners will keep winning, yet DSP’s quartile analysis between 2013 and 2025 finds that 60% to 80% of top-quartile schemes over any three-year window slipped into lower quartiles over the next three years, with some cohorts seeing a 100% failure rate. This makes extrapolating a 20% CAGR fund into a “safe” 15% to 18% future return a risky shortcut given competition, style cycles and mean reversion.
8) Index targets give a reliable map for the year ahead
The ritual of setting Nifty and S&P 500 targets is treated as essential guidance, but over the past 25 years the median one-year-ahead S&P 500 forecast has never been negative, even though seven of those years ended down. Year-end targets for both indices have regularly missed actual outcomes by more than 10% in both directions, especially near peaks and troughs, showing they reflect prevailing mood more than any durable edge.
9) Starting valuation doesn’t matter if you’re “long term”
A popular comfort blanket is that, over long periods, entry valuations are irrelevant, yet Sensex versus debt charts across cycles show that buying at extreme price-to-earnings multiples can leave investors underperforming simple debt for a decade or more. In the early 1990s and post-2007 peaks, equity buyers effectively endured bond-like returns with equity-like volatility, undercutting the idea that time in the market always rescues expensive entries.
10) Small and midcaps always outperform largecaps
The notion that small- and mid-cap stocks inherently deliver superior long-term returns is complicated by DSP’s cycle analysis, which shows SMIDs generating huge alpha in upswings and then surrendering most of it in subsequent downswings. Two-year rolling alpha charts for mid- and small-cap indices versus the Sensex swing from strongly positive to sharply negative, suggesting their dominance is cyclical, not permanent.
11) Higher risk always guarantees higher return
The cliché that more risk necessarily means more return is challenged by low- and high-beta, as well as low- and high-volatility portfolios built from NSE data since 2007, where low-beta and low-volatility baskets actually delivered higher compounded returns. These lower-risk portfolios also suffered shallower drawdowns than their high-beta, high-volatility peers, aligning with global evidence that managing downside is crucial for compounding.
12) The success of a SIP depends heavily on when you start
Finally, investors often worry that starting a SIP at market highs will doom their returns, but Nifty 500 data on seven-year rolling SIPs starting at all-time highs, after 20% rallies and after 20% corrections show median outcomes clustered within about one percentage point of each other, around the low teens. For disciplined investors who stay invested over meaningful horizons, the precise starting level matters far less than consistency and time in the plan.
In pulling these threads together, DSP’s NETRA deck argues that the real edge in today’s market lies not in finding the perfect forecast for gold, Nifty or GDP, but in cutting through seductive narratives with data, respecting valuations, diversifying sensibly and tuning out excess noise that has turned toxic for many investors.
Also read: ‘Too cheap to ignore’: Jefferies initiates coverage on Emmvee Photovoltaic, sees 70% upside
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
