Stories
Why Investing in Yesterday's Winners Can Be a Costly Mistake
- •Chasing past winners often results in buying too late after much of the return has already been delivered.
- •Morningstar's Buy the Unloved strategy demonstrates that popularity has a price and unpopular investments can offer strong value.
- •Foreign portfolio investors have heavily sold Indian equities recently, with massive outflows recorded across 2025 and 2026.
- •Historical data shows that intense foreign selling during crises like 2008 and the pandemic was often followed by strong market recoveries.
- •India has significantly underperformed emerging markets over the last two years, reaching historical extremes in relative performance.
Key Questions Answered
Morningstar's Buy the Unloved strategy involves investing equally in the three equity-fund categories experiencing the largest outflows rather than those attracting the highest inflows. This approach demonstrates that popularity often has a price and that buying what is unpopular can yield striking long-term results.
Foreign portfolio investors withdrew approximately ₹1.64 lakh crore in net equity outflows during the calendar year 2025, followed by another ₹2.24 lakh crore withdrawn as of August in 2026.
History shows that periods of heavy foreign selling were often followed by strong market recoveries. For example, following the Global Financial Crisis in 2008, the Nifty rebounded more than 70% in 2009 and delivered another positive year in 2010.
