Taking care of my own busyness

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It happened again. I had lunch with an ex-colleague back from that phase in my life when I served my corporate duties and built up the foundation of my finances. TACOMOB: “How are you?” CORPORATE WARRIOR (CW): “Busy.” TACOMOB: “Busy with what?” CW: “Busy with work, what else?” TACOMOB: “Why are you not busy with life?” CW: “Actually, I am busy all of the time.” TACOMOB: “What … [Read more...]

Have you recently thought about the Recency Bias?

We tend to associate more importance to recent events than we do to less recent ones. The more vivid our memory of something which occurred in the past is, the more “available” that event will be in our mind and the more probable it will seem to happen again. But that’s not the right way to assess risk. An event does not become more likely to recur merely because its last occurrence was … [Read more...]

Old news that made me go hmmm last week

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I am not a very up-to-date kind of guy. Sometimes I stumble across some very old facts that I did not know about before (and that have nothing to do with investing). Like this one: The condor uses the least energy to move a kilometer of all species. So far so good. That sounds reasonable. The source being a study published by Scientific American in March 1973 (= good excuse for not having … [Read more...]

Sadly there might be four more less happy people in Singapore soon

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Most of us think that if we win the first prize in a lottery we’ll be happy forever. A few days ago four fellow inhabitants of Singapore won the TOTO Hongbao draw bagging about S$3 Million each.  Soon they will find out first hand whether our forecast is true or not. The research on happiness after striking it big in the lottery suggests that not only is it not true, but if anything, lottery … [Read more...]

The benefits of being a wee bit sceptical in believing others

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I am convinced that my brain does a poor job of separating truth from fiction.  This leads to many false beliefs.  Therefore, I want to make at least a minimal effort to understand my brain better and be on guard against its deceptive ways. Part of that minimal effort is to read stuff on and about that approximately 1.4-kilogram lump of electrophysiological goo that I am a proud owner of (most … [Read more...]

Mere-exposure effect

The time has come again. It’s that time of the year when families gather for reunion dinners, when extended families from far-flung corners of Singapore meet in one central place for the annual “oh-how-have-you-been – when-are-you-getting-married – have-you-gained-some-weight – conversations”. Those events usually never pass without the obligatory gather-everyone-in-one-shot photo taking … [Read more...]

Luckily I am so lucky

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Chatting with one of you the other day over a kopi C (that’s coffee with evaporated milk for my dear non-Singaporean readers) made me realize that you might have gained the wrong perception of me. You might believe that due to my heavy weightage of posts on investing and our biggest flaw in investing (our emotional brain) I might be somehow skilled in finding lucrative investments. Sorry to … [Read more...]

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...]