Author: Taking Care Of My Own Business

Extreme Discounting

It’s the time of the year again where we start out with a bag full of New Year’s Resolutions and than slowly … one by one … fail to execute them. Do you happen to have set the resolution to start saving for retirement? So how have you been doing so far? I tell you your chance to fail is very high. When we are presented with distant commitments, we tend to stumble on the difficulty that our brain has in placing us in the future with any degree of accuracy. Why is that? Because our brain evolved to make...

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New year, new start, the most accurate stock market forecast for 2020

Because it’s kind of a tradition and because I have a 100% success rate with my previous forecasts here we go again: But first, let’s ponder on this: What’s the significance of a year anyway? It’s merely the orbital period of the Earth moving in its orbit around the Sun. But that does not mean that we have to think in that timeframe all of the time. Firstly, why would we have to measure our annual portfolio return based on calendar years? I am always a bit puzzled when bloggers like to share their annual portfolio returns. Are we small investors...

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My key points from 52 books I read in 2019 in less than 52 words each

At the beginning of 2019, I set myself the goal to read a book per week. I believe reading is “learning accelerated”. In a handful of hours, I get to absorb what took someone else years to accumulate, understand, distill, and refine. Reading is the best return on investment.  We have to live our entire life in order to know one life.  But with reading, we can know 100s of people’s lives for almost no cost. What a great return! And I did it! Ok, I have to admit, for the last book I am only 2/3s through. But...

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Is it money that motivates you?

Are you motivated to work and to invest? By what exactly? Some say, “One single motivation model does not fit all, because everyone is different.“ I say, “Everyone is NOT different. At our core, we are wired the same way. We are all human beings. What motivates and inspires me, motivates and inspires you.” And very few people are wired to solely work for money (though they will pretend that they are). Certainly, competitive pay is a must for attracting and retaining us at work. Yet, when it comes to reinforcing behaviors and boosting our engagement, money has a...

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Choose: wisdom or gold?

Had a chat with my sons. I thought at their age of 20 and 18 (soon) it is about time for some real adult talk. So I asked them whether they’d prefer wisdom or gold. The unanimous answer was gold. They shot out the answer so fast that it might have been their emotional heart speaking and not their rational brain. Granted, I daresay that most of us have the wish to be guests at the Banquet of Good Things and that many believe that with money/gold, this can be achieved. So, let’s say that you manage to find a genie in a bottle and he grants you a free wish. ...

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“Work-Life Balance” is such a misnomer

(C) Nikki Chiang How we talk about issues makes a difference. Notice that coining that term they didn’t call it “work-home balance” or “work-family balance.” By the ’70s and ’80s, when the work-life movement gained momentum, they had already taken it for granted that they didn’t want to go to work. So much so, that they didn’t even think of work as life! Isn’t work an integral part of life? If we are not alive at work what are we then? Balance implies that there is always a winner and a loser. An either-or and never an and. Balancing...

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Let’s do it – 100 solutions to reverse global warming

When I read articles about climate change it leaves me overwhelmed with the size of the problem and paralyzed into inaction. But only collective actions help. So I chose to stay engaged with my small gestures. Gestures of hope. Hope, as long as it’s not a form of denial, can be a powerful motivating force, pushing us to adopt a more future- and action-oriented mindset. There are plenty of “low-hanging fruits” to do our part. 1. Go easy on the air-conditioning (we do it despite having solar panels on the roof of our home). 2. I don’t sit in...

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Retirement Has An Image Problem

Are you yearning for retirement? But retirement has an image problem. What kind of mental picture does this word conjure up for you — sunny beaches and no longer having to set an alarm clock? Or a stressful feeling about how much longer you will need to work to afford such a lifestyle? If ever there was a word that needed to be retired, it’s retirement. Meet “Life Two” in this thought-provoking article in the Financial Times. Life Two: What we used to call ‘retirement’ I think “Life Two” is quite catchy. What do you think? And if you...

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An investment idea that returns peace of mind

How many trees are there on Earth again? There are approximately 3 TRILLION TREES IN THE WORLD. A number that looks even more impressive when it’s written out: 3,000,000,000,000. That’s about 390 trees per person. But what’s more astonishing is that we didn’t have this estimate until recently. In fact, scientists used to believe that the number of worldwide trees was a whole lot lower (something like 400 Billion). No one bothered to do the dirty work of tree counting until recently. While 3 trillion trees sound like an astronomical number, it’s almost half as much as what used...

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The rational optimist

I am sure you have encountered “the glass” before. Now, this glass is unique in the fact that scholars and non-scholars seem to wage a fierce debate over the contents of said glass. One side says that this proverbial glass is half empty and the opposition adamantly argues that the glass is, in fact, half full. The pessimists vs the optimists debate. What’s the small difference between them? An optimist thinks that this is the best of all possible worlds. A pessimist fears that this so. The Psychologist Martin Seligman found that when we shift our explanatory style from...

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You can’t see their savings. But you can …

… see what others are spending. And that is a problem. Due to our envy bias we do pay more attention to how our friends and neighbours spend compared to how they save. Well, comparing with friends might be a bit understandable. But comparing with your neighbours is rather irrational and random. You do not need to earn other people’s approval.  Who told you that this would be important in life? Why do you still do it? Social Comparison Bias Attentional Bias External validation where you put more weight on how we are seen in others’ eyes than how...

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Are you still admiring Warren Buffett’s style of investing?

Who still believes that you as an individual investor can still outperform a broad-based ETF by picking some “superior” stocks? Ok, ok. I agree, Index Funds and ETFs will never bring you alpha but they also won’t require so much attention, emotional strain or behavioral challenges. As I am convinced that investor psychology drives the majority of returns. And as I am convinced that getting rich slowly is the only sustainable way. I am convinced that the rules to grow my nest-egg are rationally quite simple: Diversify. Rebalance. Keep costs low. No one writes a book about those basic...

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Do you see Artificial Intelligence as a risk or opportunity for you personally?

I thought about that question for a while. That led me to another question. An even more fundamental one: What does it mean to be human in the age of intelligent machines? The world is constantly changing but the wetware in our brains has stayed relatively constant. If machines can compete with people in thinking, what will enable us to continue to create social and economic value? What makes us humans unique? The answer is the one thing machines will never have: “a heart.” Humans can love, we can have compassion, we can dream, we can inspire. While machines...

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Only intrinsic motivation lasts

Would you agree or not? Have you ever felt a drop in motivation to actively take care of your investments? If you are not intrinsically motivated, your default option is usually extrinsic motivation. That leaves you foraging for carrots (money, rewards, praise, power, status, prizes) proven to have just the opposite effect as intrinsic motivation. You may experience a burst of energy, but it’s not the kind of energy that promotes creativity, happiness or well-being. And, it dissipates quickly, leaving you starving for more carrots just to keep going. Unfortunately, intrinsic motivation driven by our passion is rare. Especially...

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What is the largest company by Market Capitalization right now?

Correct, Microsoft. Microsoft has gone through a massive leadership style change in February 2014 from Steve Balmer to Satya Nadella. Under Ballmer’s tenure as CEO, Microsoft’s share price stagnated despite Microsoft’s financial success at that time. His management style was rather harsh. He insisted for example on a system called “stack rating,” whereby every member of the company was judged relative to his peers. “Every current & former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft,” journalist Kurt Eichenwald wrote back in 2012. Not very empathic. Enter Satya Nadella presently widely regarded...

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