Author: Taking Care Of My Own Business

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

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 operating expenses and fees, whereas sales loads are one-time charges and may either be front or back end sales charges. The US Securities and Exchange Commission (SEC) summarizes the regular fund operating expenses by enlisting these fees into the category: Investment Advisory...

Read More

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

“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 confusing.  You don’t want anything to do with it.  Nevertheless, you love money (when you have it).  Still, you see no irony in this. The way out of the rat race: Do learn as much as possible about how money works, so that you do not have to spend your entire...

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 sleep. But don’t let your guard down. It is a good time to revisit two of our psychological quirks we are saddled with as part of our evolutionary baggage. The Normalcy Bias...

Read More

Are you in control?

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 selecting durian (when in fact, the whole batch just happens to be good). Here’s another example: You play the lottery and win millions.  Therefore, you assume that this is (partly) the result of how good your— lucky—numbers are, even though lotteries are totally random and cannot...

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 time. My wife should love me more. You need to take better care of yourself. Julie did not smile at me. My children do not care enough for me....

Read More

Zero-Risk Bias

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 example.  This is our preference for reducing a small risk to zero over a greater reduction in a larger risk. It plays to our desire to have complete control over a single,...

Read More

Stuff I read last week – One

Reading is not too bad an investment of time.   In a short period of time I get to absorb what took someone else years to accumulate, understand, distill, and refine.  There could be so much to learn from what I read.  If I just could remember everything I read. To increase my rate of recall I do talk myself into typing out the core concepts.  This should help.  Albeit only a bit. Because taking notes with a pen and paper, rather than a laptop, leads to higher quality learning, as writing is a better strategy to store and internalize ideas...

Read More

The law of small numbers

In my previous post I shared a few thoughts on probabilities and statistics.  I wrote about disregarding probabilities in decision making, ignoring small probabilities and not over-weighting small probabilities. A tough act to follow.  I am totally guilty of failing at it. Especially in view of all those solid statistics media, ‘advisors’, and the internet are presenting to me on a silver platter. The only positive aspect here being the silver platter itself. That one is getting much more valuable in recent times.  Just check out the Silver Price Chart. But careful, a chart is just a form of...

Read More

Gambler’s fallacy in a world of uncertainty

Gambler’s fallacy is a term we often hear.  What is it exactly and how does it affect what you do with your money? It is the belief that future events will be shaped by past events, even when the two have no correlation.  A gambler will assume a coin is due to come up heads after flipping a string of tails, but the outcome of the next fair coin flip is completely independent of the last one—the odds are still 50/50! Coins have no memory. Investors fall for a version of gambler’s fallacy when they assume things like economic data,...

Read More

Halo Effect

This post has nothing to do with Brexit, UK’s ego, or the unfairness in life that the older generation always decides on things the younger generation has to live with. But then, maybe it does … Let’s visit another continent for a while. Who has not heard of Warren Buffett?  For more than 10 years, one of the richest men on the planet.  But did you know that of his current roughly $60 billion net worth, $57 billion was added after his 60th birthday? If Buffett had started saving in his 30s and then retired in his 60s (like...

Read More

Don’t do envy

The GSS – the Great Singapore Sale is upon us again.  And I am not talking about the Singapore stock market here. It’s an opportune time to remind ourselves of that one emotion that is the cause of the lack of wealth in the lives of many.  It is envy. I have briefly written about envy here, and here, before. For me, envy is such a huge lever—negative in this case—to one’s happiness and subsequently to wealth (mind you, not only the monetary wealth!) that I want to share a few more thoughts on this malicious emotion. Have you ever asked yourself what’s goes on under...

Read More

Warning: For serious investors only! PART 2

At the end of part 1 of this blog post we parted with the open question: How were most of these investment legends able to be wrong more often than they were right and still make incredible profits? To analyze the differences the author grouped those investment legends according to certain behaviors they displayed after the investments were made (entry is not as important as so many people try to make us believe), namely, when they were loosing and when they were winning. A) They were loosing. What did they do? The RABBITS were caught in capital impairment.  When...

Read More

Warning: For serious investors only!

Oops, did you click this post by accident?  Or did you conscientiously click it because you do consider yourself a “serious investor” – I mean – serious investor (no irony intended)? I do apologize if my header created any sense of overconfidence in you.  I certainly would not want you to engage in even more risky behaviour. On the contrary. With this post I want to share with you what I have learned from reading the book “The Art of Execution” by Lee Freeman-Sohr. A book summary? Really? Are you disappointed now? Well, as you are already here you...

Read More

Back to some basics: Good Debts vs Bad Debts

I believe in growing our wealth defense is often more effective than offense. And a good defensive approach would be not to get too deeply indebted (money or otherwise). Some people say—follow the Golden Rule—”Don’t get into debt at all.” I say, “It depends.” If you read about rich people and how they got there, you would hardly find anyone who did not take on any debt at some time in their career. Their secret is that they take on good debts  only. A good debt  is one where the value of what you bought increases more each year than the interest rate you’re paying. For...

Read More

The only place success can be found before work …

… is in the dictionary. Have you ever thought for a moment that there really is a shortcut to success without having to put any effort in it? Change your life-style mindset and change your thoughts. Here are some ideas I gathered over time from those “Success books” I read for you to ponder: The components of success are the small choices made every day.  We are all given the same 24 hours in a day.  How we utilize them is key. Get up early, eat healthy, keep fit, and stimulate your brain. Be a friend. Act like your success is your responsibility.  Take more care of your own...

Read More

Like us on Facebook

Follow us on Twitter