The Decoy Effect and other retail marketing gimmicks

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I have been fooled.  I am convinced. It was about one year back when I was sourcing for a new family TV set.  Off I go to one of those notorious big (presumably) discount retailers.  After I mentioned that I am interested in a certain brand the friendly (aren’t they all friendly here in Singapore?) sales guy showed me three models with slightly different features.  He praised the latest … [Read more...]

ME Pte. Ltd.

Warning – very egotistical post ahead with nothing new, but stuff you knew already. The other day Rolf Suey dropped a fitting comment to my post  “Is having more money important to make you happier? Let’s put it into perspective” He quipped “after you are flush with cash, u want even higher authority so that u want to be become a president!” My response was “Yeah, president of my ME Pte. … [Read more...]

Is having more money important to make you happier? Let’s put it into perspective

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Would knowing that you are among the TOP 1% earners in the world make you happy? How much does one need to earn to be among the TOP 1% of the world? US$ 34,000 or about S$ 45,000 per year. Only so little? Yes! Don’t you feel much happier already?  After all, often it only depends on the perspective on life you take to feel grateful and happy! Still have doubts that this could be … [Read more...]

Three of the hardest words in the world to say …

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I don’t know. The human refusal to say “I don’t know” has huge consequences, for example, not getting good returns from your investments in the stock market, because there is a strong correlation between knowledge and humility.  As such, the best investors are those who realize how little they know. Don’t be one of those people who spend 10 minutes on Google studying, for example, monetary … [Read more...]

Greed or need?

A few days back I wrote about “Am I saving enough?” Thank you for all your comments.  I am just afraid that those people with their benchmark savings ratios are not really representative of the regular guys. Could it be that those who do save much less right now did not dare to comment at all? And would you consider those with more than 50% savings as “greedy for retirement”? The harsh … [Read more...]

Am I saving enough?

Quick question: Would it be easier for you to save 20% of your monthly income, or to live on 80% of your monthly income? In case you answered, “Save 20%,”  you are just average (sorry for being so blunt) and might be suffering from the Loss Aversion Bias. In case you answered, “Live on 80%,” you belong to the vast majority of people who took part in that survey. In case you answered, … [Read more...]

The Backfire Effect

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We all have a preferential set of intuitions, feelings, and ideas. Less poetically characterized by the term “bias”. These little quirks in our thinking pose a challenge to our ability to weigh evidence accurately to arrive at truth.  Bias is that fat thumb that experience puts on the scale. Bias is an intuition – a sensitivity, a receptiveness – that acts as a lens or filter on all our … [Read more...]

Who is weird?

The other day I met some new people.  After exchanging the usual conversational stuff we got to the big question: “What do you do?’ I described in vivid pictures how I have been taking care of my own business, my early ‘retirement’ from corporate duty and my goal to finance all my expenses from dividends and capital appreciation of my investment and trading portfolios. I got that look from them … [Read more...]

The Well-Travelled Road Bias

Nowadays I am a bit more on the road visiting prospects to share with them those benefits my value-add-products could deliver to their operations.  As such I come across this common experience for motorists more frequently: I am driving somewhere new and I am running a tad late. As I drive down unfamiliar roads it seems that everything is conspiring against me: other cars, the road-layout, … [Read more...]

8 Truths I do like to remind myself of

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Busy schedules and weekly routines have a tendency to put my brain on autopilot and I lose sight of the important things in life. Some of life’s essential truths need repeating.  So, I’d better write them down: MY SELF-WORTH MUST COME FROM WITHIN When our sense of pleasure and satisfaction are derived from comparing ourselves to others, we are no longer the master of our own destiny. … [Read more...]

It happened again – Self-enhancing transmission bias

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I caught myself again yesterday.  I was having coffee with an ex-colleague of mine.  Back from the phase in my life when I was doing my ‘corporate duty’.  I do like to occasionally check in with my ex-colleagues to see whether the corporate life has improved since I had left three years ago.  And it … But I am digressing. Anyway, my colleague asked me how my life as an investor (and … [Read more...]

How I learned about the stock markets – going way back in time

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The other day I was reminiscing about two epiphanies that influenced my choices in life. So back in those days I wanted to be independent.  And I figured the best means to independence is money.  Not for the sake of being rich.  I don’t have to be rich but, rather, independent. During my juvenile-delinquency-days back in Germany there was a prominent stock market guru who influenced my first … [Read more...]

How I learned to mind my own business

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Some of my loyal readers – ok, make that two – asked me at what age I started to mind my own business and to actively take care of my own business. Here is how it all started: Well, that’s not really how it happened. This is what happened: I experienced two epiphanies in my early stages of my professional life. The first one occurred in my mid twenties. My boss, who I looked up to … [Read more...]

Why ETFs are a good tool to slaughter some of our biases

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Being biased brings with it that we don’t think like we think we think.  We make illogical decisions. Passive index fund investing via a Regular Savings Plan or Dollar-Cost-Averaging is logically right, right? But emotionally and in terms of common sense, it often feels wrong. I do believe it’s worth remembering now and then just how strange it actually is.  I get this feeling … [Read more...]

How much does money matter to you?

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There is no denying the fact that our lives are determined by our unconscious beliefs about money. So what do you really believe when it comes to money? I am convinced that discovering and exploring your general attitude towards money is an essential step in improving your financial health. And to help all of us in that challenging self-awareness process the profession of psychologists … [Read more...]

The Ostrich Effect

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I initially wanted to put off writing about this fallacy, but I cannot avoid it. Psychologists use this term to describe the decision to ignore dangerous or negative information by “burying” one’s head in the sand—like an ostrich—and hoping it would disappear. The ostrich effect is one of the most ominous of fallacies, since it is the belief that things can be kept static by inaction. But … [Read more...]

Let’s regress to the mean together

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…but before we do that, allow me to elaborate a bit on it. Regression to the Mean (RTM) is the tendency for trends to flip with the passage of time; it’s nature’s way of levelling the playing field.  Most things on Earth revert to the mean over time and this includes investing as well. It means that whenever you hope that a very high investment return would continue, the odds would be … [Read more...]

The single largest risk to investors in today’s markets

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…is themselves. That’s right, the single largest risk to investors is themselves. By that, I, of course, mean the influence of human emotion and psychology in decision making. It seems quite clear to me that humans are uniquely wired incorrectly for long-term investment success. When asset prices double, we want those assets twice as bad, but when asset prices drop in half, we want … [Read more...]

New year, new start, same old, but still the most accurate stock market forecast for 2016

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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 know for sure what’s going on),  I did get asked—by my three friends and my one wife—about my take on 2016. So after thorough … [Read more...]

It’s that time of the year again

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It’s that time of the year again when avalanches of New Year’s resolutions are launched with idealistic plans for drastic self-improvement in 2016. We resolve to quit drinking, smoking, or both.  We resolve to help others, and to spend more time with our friends and family.  We resolve to finally get out of debt, and immediately into building up a neat retirement nest egg.  We resolve to make … [Read more...]