No Theme Runs Forever: Debunking the Misconception of Set-It-and-Forget-It Investing

Investing Myth Busted: No Theme Runs Forever, Warns Veteran Investor Devina Mehra

Veteran investor Devina Mehra, Chairperson of First Global, has flagged a key behavioural trap in investing, warning that no theme, sector, or asset class delivers outperformance indefinitely. Despite investors continuing to chase past winners, Mehra emphasizes that market history reveals leadership changes over time across geographies, sectors, and styles.

Drawing from market history, Mehra notes that market composition itself has evolved dramatically over time. Two to three decades ago, benchmark indices like the Sensex and Nifty had a significant presence of public sector undertakings (PSUs) and virtually no financial sector stocks. Today, financials account for the highest weight in these indices, reflecting a complete shift in market leadership.

Mehra also points out that what constituted "blue chips" in earlier decades has changed entirely. Around 40 years ago, companies such as JK, Thapar, and Mafatlal were considered top-tier names, but many of them no longer hold the same relevance in today's market landscape. The popular "buy and forget" strategy often cited by investors is flawed, Mehra notes, due to survivorship bias – a tendency to focus only on successful outcomes while ignoring failures.

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Citing examples from the banking sector, Mehra notes that while stocks like HDFC Bank and Kotak Mahindra Bank have delivered strong long-term compounding, many other banks of similar vintage failed to sustain performance or disappeared altogether. A similar pattern has played out in global markets as well, including in the U.S. technology sector, where leadership has constantly shifted despite periods of strong outperformance.

The broader takeaway, Mehra suggests, is that investors should avoid blindly extrapolating past trends and instead remain adaptive, recognizing that market leadership is cyclical and constantly evolving.