It is all about the ATTITUDE – yours actually

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Yeah, you are so right, I am stating the obvious here and why should you waste your time reading about the obvious. But apparently, it is not as obvious as it should be.  Not to everyone. Just an example. Yesterday morning I had a minor argument with my son (this time my oldest son and not the curious career minded one from my previous post). Me: “Don’t always give up so easily. How well … [Read more...]

Economic Forecast Illusion or why “Economist” is one of the worst professions one could choose – Long Version

In my last post I mused over Forecasts and those guys who come up with them.  In my little research I came across so many noteworthy facts and statements on that subject that I decided to collate them in a separate post. Here we go, some 32 randomly listed observations on why Economists have a tough stand: 1) No Economist has ever convincingly explained why a normal economy has to go through … [Read more...]

Economic Forecast Illusion or why “Economist” is one of the worst professions one could choose

Two recent events triggered me to do a bit of research. My son – having started Secondary Level 4 a few days back – asked me which job would be the best and whether he should target the Junior College or Polytechnic as his next step on the educational ladder. I saw multiple headlines in print and online media about Economic Forecasts for 2017 and sometimes even beyond. So, have you ever … [Read more...]

New year, new start, same old, but still the most accurate stock market forecast for 2017

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At the beginning of each year, there are many pundits, experts, self-proclaimed gurus, and other suspicious characters who’d like to sell you stuff predicting the directions of the Stock Markets. As I personally have ample years of experience in the Stock Markets (and thus know for sure what’s going on),  I did get asked—by my three friends and my one wife—about my take on 2017. So after … [Read more...]

Have you decided yet?

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This post is for you.  Yes, you, who sent me that e-mail yesterday asking me whether it would be a good timing to start investing in the stock market right now. I understood from your mail that you have not started to invest anything in the stock market.  All savings are in FD and you are – figuratively spoken – sitting on the fence waiting to deploy your savings into the “risky stock market” … [Read more...]

The only certainty is …

… that there is no certainty (ok, I admit death is the only thing we can know with any certainty, but my intention is not to write about the end here, I have done that before and it didn’t end too well). Nevertheless, we suffer from the Certainty Bias.  Our mind’s pull for certainty has different consequences.  The mind likes nice, uncomplicated beliefs which can help us make sense of a … [Read more...]

100 Biases and Bias Bias

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einhundert – 100 – one hundred The other day I have shared with you this gigantic Cognitive Bias Codex.  It contains 189 different biases.  So far I have written about 100 biases that make you do dumb things with your money.  So, bear with me.  I am merely half way there in gathering awareness about those hidden flaws in my own thinking. Anyhow, this 100-milestone justifies – in my biased … [Read more...]

Familiarity Bias vs. Ambiguity Effect

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Or otherwise known as reliance on old-fashioned financial institutions and outdated economic structures.  Partly, it is due to habit; partly, because of our concerns about liquidity; and partly, because we think that it is always risky to experiment with new things where we might lack information (“ambiguity”). We seem to want to persist in using the tried financial technology that was used by … [Read more...]

Fading Affect Bias

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Among the many quirks our brains have is something called the “fading affect bias.”  Basically, we aren’t very good at remembering negative emotions.  Our brains shrink the memories of bad times, painful experiences and anything generally unpleasant. That is generally a good thing. But could it be that we carry this bias into our portfolios as well. That is generally a dangerous … [Read more...]

Cognitive-Biases-Life-Hack

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Emotions are the main cause and driving force in the stock markets. Last week I shared some thoughts why understanding our mind as a tool that tries to live in an uncertain world is an important challenge. Because the brain hums away invisibly in the background, we tend to overlook its contribution and take it for granted.  Misunderstanding the working of our own mind does not, thankfully, … [Read more...]

Are you investing/trading like a scientist or like a lawyer?

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Before you read on, take a minute and think about this question for a while. Look back at your recent transactions. How did you arrive at those decisions? Are you happy with your past decisions? Any regrets? C’mon.  If you’ve never yelled “How could I have been such an idiot?” at yourself in a fury, you are not an investor and certainly not a trader. Now back to my headline … [Read more...]

A trip to Lake Wobegone

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This trip is for the stock traders among you. What kind of annual return are you aiming for? 30% or 20% or 10%? What’s your number? Humans, and especially those of the male persuasion, have a bias called The Lake Wobegone Effect.  They have the tendency to overestimate one’s own abilities resulting in unrealistic expectations.  It is named after the fictional town created by Garrison … [Read more...]

Without this you will never achieve Financial Freedom

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Enoughism* You have to find, define and fix your personal level of ENOUGH.  Where you possess everything you need, and buying more would actually make you worse off. In my most recent post I have brought up the crucial question: “How much do I need to lead a life that is meaningful, purposeful, and joyful?” Once you have answered that question for yourself, documented it and then never … [Read more...]

Not-Invented-Here-Bias

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Last week I wrote about expensive Mutual Funds / Unit Trusts and their cheaper (and better) alternatives called Exchange Traded Funds (ETFs). You still don’t buy it. Ok, that might be my fault because I am simply not convincing enough that passive, systematic, repeatable investment strategies are the best option for the majority of investors. Or, maybe you could be suffering from the … [Read more...]

The stuff that could make all the difference in your Mutual Funds

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Fees and Expenses. Investors in mutual funds incur two primary kinds of expenses and fees: Fund expenses and loads.  Whereas fund expenses are paid indirectly from fund assets throughout the year, sales loads are one-time fees that investors pay either at the time of purchase or when units are redeemed. Take a deep breath and let’s go for a deep-dive into those expenses Fund expenses cover … [Read more...]

Can you afford to ignore the long-term importance of money?

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“Oh, money,  I’m actually not interested in money.”  So many people say that. Yet they’ll work at a job for eight hours or more (that they don’t even like) just to be able to buy stuff to impress their neighbours, the Tans and Lees (who they don’t really like either), who might be buried in debt—from trying so hard to impress them. Many of you hate financial education.  You think it’s … [Read more...]

Normalcy Bias and a bit of Impact Bias

Yaaawwnn.  The stock markets in the last few weeks have been rather boring and uneventful.  The US-market (measured by the S&P 500) has even entered an unusually long period of volatility contraction.  The daily market moves up a bit and then down a bit.  All in minuscule steps.  We recently have gone through the least volatile period in almost 23 years. This market action can lull one to … [Read more...]

Are you in control?

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The desire to feel like we’re in control seems to be a very basic human need. Are you in control?  Do you like to control your environment? Well?  Were you successful in that endeavour?  C’mon, be honest. Because—Control—is an illusion! Let me give you an example from Singapore: You choose a durian from a street vendor which tastes delicious, so you assume that you are very skilled at … [Read more...]

To stay stress free, take care of your own business and not other’s business

The other day some friends asked me what Tacomob actually means and stands for.  As this is a FAQ I often encounter, let me share my thoughts here: In one sentence, I prefer to Tacomob instead of mentally doing other’s business. What do I mean with “other’s business”? Example thoughts of being in “other’s business”: You need to get a job. I want you to be happy. You should be on … [Read more...]

Zero-Risk Bias

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My brain is flawed.  It is a flawed lens through which I see reality.  This is true of both mouse brains and human brains.  But a human brain is a flawed lens that can understand its own flaws—its systematic errors, its biases—and apply second-order corrections to them.  This, in practice, makes the lens far more powerful.  Not perfect, but far more powerful. Take our zero-risk bias for … [Read more...]