Herman Ye

Bitcoin's a fascinating story. So much has happened in its short existence. Price explosions (and crashes), debates about the future of money, the emergence of an infinite universe of cryptocurrencies and crypto-related businesses. Despite Bitcoin's impact, I still have a hard time getting the point of it.  Born in 2009, Bitcoin was a response to the Great Financial Crisis. Massive bailouts raised a lot of concerns about the stability of money. Backed by code and free from human messiness, it was supposed to be the new standard - decentralized and incorruptible. Unfortunately, it hasn't played out this way.  Adoption's been weak. There's no incentive for businesses to accept it or for consumers to use it. Good ol' cash is easy, so why bother?  Bitcoin is volatile. It's extremely inflationary and deflationary, able to move violently in either direction in moments. Money needs to be stable, no one can make rational spending decisions otherwise.  Plus, it's...

Scroll through your newsfeed and 9 out of 10 stories will tell you the world is ending. Negativity has a monopoly on headlines. Pessimism sells. It captures your interest and your clicks.

My investment strategy is simple, I buy few index ETFs and hold them forever. Happy with market returns, I forgo any attempts at outperformance. I've written a fair amount about my liking for a low-effort, low-fee, passive strategy. Despite this, I am not at all against active investing.  You can be very successful picking the right investments. I know those who've made a lot doing so. I also know those who've lost a lot. These groups are not mutually exclusive.  Active investing is hard, and it very well should be. If everyone could do it, all profits would vanish. Only a few outliners will ever do well. This applies across all fields. Only a few players will make it to the NBA, even fewer will win a ring. Only a few authors will get a publishing deal, even fewer will make the best-sellers list. It takes a lot of effort ( plus some luck ) to become elite. If you're able to rise above, tremendous fortunes await.  With great rewards come great risk. The risk of wasted ef...

  In 2020 the global economy shut down. Even with the financial consequences, the S&P 500 is up 2% for the year. A year ago, no one saw a pandemic coming and a few months ago no one saw stocks recovering.  The world is unpredictable. The stock market, fuelled by the emotions of unpredictable people about our unpredictable world is many times more so.  Stock returns are volatile. This holds true for individual holdings and as well as diversified portfolios. Since inception, the S&P 500 has averaged a 10% annualized return. In its near 100 year history, there's only been a handful of times where it returned 10%. The average is nothing to count on.  You never know where stocks going. The smartest minds have tried, putting together sophisticated models to play fortune teller. Many have been burned doing so. Models are built with massive amounts of past data. Unfortunately, things that's never happened before happen all the time. Events like Black Monday...

Investors like to keep a close eye on interest rates, especially those who hold bonds. The two are closely related. When one goes down, the other goes up. This can cause some confusion. Shouldn't higher rates mean more valuable bonds?  New bonds are issued all the time. It can be weekly, monthly, quarterly - depends on the issuer.  Bonds are essentially loans to companies and governments, where in return investors are paid interest at a fixed rate. If rates rise, bonds issued prior to the hike will provide a lower return than their newer counterparts - becoming less valuable. When rates drop, old bonds will provide a higher return - becoming more valuable.  Let's say you purchased a 10-year bond with a par value of $1,000 and an interest rate of 4%, this equals to a return of $40 a year. If interest rates rise to 5%, new bonds will be paying investors $50 a year. 20% more than what your bond pays.  If you want to sell your bond, it'll be impossible to sell...

Backtesting is a popular tool amongst traders and marketers. Traders use it to experiment and uncover new strategies. When one looks promising, the marketers go to work! Creating fancy charts and graphs to sell you on hypothetical performance. But are strong backtests indicative of strong future results?

Analyst targets in theory can streamline a lot of trade decisions. Target price is higher than the current price? BUY! Oh, if only it was that easy. 

Morningstar is renowned by professionals for their research and insights. For us everyday investors, we might recognize their signature 5-star rating system. Big banks love to brag about their stars! But do more stars equal more returns? The rating is fairly simple. Morningstar groups funds with their peers. Funds that have beaten their peers will get 4 to 5 stars, funds that underperformed will get 1 to 2. Based purely on historical data, it doesn't do much in predicting the future. Past 5-star performance doesn't equal future 5-star performance. The  Wall Street Journal  studied thousands of funds since the star rating's inception (2003-2017) and it was clear that top-performers don't persist. Only 12% of 5-star funds did well enough over the next five years to earn the top rating. 10% of past top funds did so poorly they ended up with an 1-star rating. This is consistent with SPIVA's findings on  persistent performance , top performers from one peri...

The stock market has been on fire. Rocketing up over 50% from the March lows taking the S&P 500 to new highs. This recovery has been the fastest - and for many the most puzzling in history. "Businesses can't open, millions lost their jobs and the pandemic rages on. Stocks don't make any sense!" There's a common misconception that the stock market and the economy are one and the same. While they're related, key differences explain the negative correlation we're seeing. Where You Looking?  Economic data is backwards looking. It tells you  historical results. Stocks are forward looking. Investors make buy and sell decisions on  future expectations.  If investors believe stocks will thrive again, then despite damning economic data, they will buy and markets will rise. The reverse is also possible. If GDP and employment is at all time highs but if investors believe we've peaked and starts selling, markets will dive. Keeping Things Pr...

The RRSP (Registered Retirement Savings Plan) is one of the most misunderstood things in finance and for good reason . There's a lot to it - taxes, investments, contribution limits, employer matching plans. These alone can create anxiety, put them together and now you're just scaring people. As a result, it gets taught through the grapevine. Casual chats with friends, families and coworkers. This informal learning has led to a lot of misconceptions. Here are some of the most common myths. 1) "My money's locked up until I retire" While yes, the goal of the RRSP is to help fund retirement, you can withdraw anytime you want. There's no age or employment status you need to reach before you can access to your money. It's always available to you.  This leads us to our next big myth.  2) "I have to pay big penalties if I withdraw early" There's no penalty. You simply pay taxes. The applies no matter when you withdraw. The RR...