Herman Ye

As the year comes to a close, the S&P 500 finishes up 16%. A solid return all things considered. 2020 was a decade in a year - we had market euphoria, panic, then euphoria again. March was the standout month of a standout year. It was peak panic and the market showed it by crashing 30%. The drawdown was agony but as with all pain, there's a lesson to be gain. Most millennials have only known a bull market. Never experiencing anything close to a crash. March was the perfect stress test of what we thought our risk tolerance was.  For me, March stung. No one likes to lose money. But I was largely unbothered. I had no plans to abandon ship. I didn't lose sleep. I was fine. Part of me was actually happy buying cheap. My demeanour was confirmation that I was in the right portfolio - for me.  On the other hand, if you sold, it's a sign your portfolio might be too risky for your tolerance.  Conventional risk assessments center predominantly on timeline. The later you ne...

We finance nerds spend a lot of time thinking about investments. Constantly watching the markets and checking our brokerage account. Overanalyzing this, over-optimizing that. All to squeeze out a few basis points. There's some value here of course but our energy is largely misplaced. Your portfolio should take a backseat to your biggest asset, you.  Human capital - the value of all your future earnings. Your economic power. Far more important than any portfolio decision. You're the cash cow, invest your energy accordingly. The more you invest in yourself, the greater your financial potential. Keep learning. Education is the greatest predictor of wealth. College graduates makes a median $30k more a year than high school graduates. Huge for a single year, life-changing over a career. The chasm grows even wider for those who up-skill post-graduation. Learning makes you valuable.   Focus on your career.  Invest in a career (or build a business) that is financially rewarding ...

Financial Independence, Retire Early (FIRE) is a lifestyle centered around frugal living and aggressive saving. As the name suggests, the goal is to stop working as soon as possible, most aiming by their 30s. The movement has a lot of fanfare with millennials. And as with anything popular with Gen Y, criticism has been prominent.  The math is simple. Figure out your annual spend, divide it by your safe withdrawal rate (most use 4%) and you have your FIRE number - a portfolio balance big enough to generate returns that can cover your expenses. Say you spend $20K a year. With a 4% withdrawal rate, you'll need $500K to retire. Easy.  This is usually where the criticism kicks in. The math is fixed, too clean. Returns and expenses are not. The markets are a mystery and life even more so. An extended downturn or a large medical bill can easily throw off your plan.  The second tier of criticism is more personal. Why work a job you hate? Why deprive yourself? Why aim to sit ...

"Too good to be true" is such a cliche - but it's a good one and it's true. Investing is a breeding ground for charlatans. Which makes sense. Wherever there's money, they're there. The scam I see a lot of lately involves training from stock market "geniuses". A classic. Fake experts have always existed, the internet has just made them louder.  The con is simple. A promise of outsize returns through some kind of proprietary system or insights. A guarantee in returns is a guaranteed red flag. Even the best acknowledge investing is hard and returns are finicky. Anyone who is this confident are at best misinformed, at worst a liar. They'll show charts of amazing performance. Usually beating the market by hundreds of points. Shouting you can learn to do it too!.....for just a few hundred bucks. What a value, right?  This is usually nothing more than cherrypicked (or made up) data. Think about it. If they had the key to the markets, why would they giv...

2020 is one for the record books. As the year wraps up, it's still hard to comprehend how weird it's been. For investors, what a journey. We entered the year riding a decade-strong bull, poised to only get stronger. Then COVID entered the chat and along came the big bad bear. The market fell off the cliff and all looked dire. Then in an unprecedented snapback, we hit all time highs a few short months later. I was fortunate enough to have stayed invested and continued investing throughout the year. Buying all the way down and all the way up. All things considered, it's been a solid year of returns. Much better than I expected. I should be very happy. But I'm human, and FOMO is real. Stories of investors making a fortune betting on stocks make my returns look like peanuts. The pandemic-induced volatility has stocks doubling and tripling in a matter of weeks. I can't help but to be tempted to join in.  Airlines are still down 50%. These stocks are due to recover and I...

Life is about timing. Graduating in 1999 would've placed you into a booming economy with jobs galore. Graduate a year later and you'll struggle for an interview (post-tech crash). Through no fault of your own, a full 180 in your life trajectory.  Timing can be the sole difference between success and failure. Retirees know this all too well. As investors, we face the risk of retiring into a down market, known as  sequence of returns risk. Positive returns in the early years of retirement equals a larger nest egg to withdraw and grow from. Retiring into a bear market would mean withdrawing and growing from a depleted position - kicking your portfolio while it's down. Even the same returns could lead to starkly different outcomes depending on the order (20%, 10%, -30% Vs. -30%, 10%, 20%). The sequence matters. Returns compound and how you start will be the difference between an upward or downward spiral.  A strong start in football could mean the difference between winning a...

Gold. The symbol of royalty. The olympian's trophy. The most precious of the precious metals. Scarce and beautiful. Durable yet divisible. Civilizations universally agreed it was valuable.  Up until the past century, paper money was backed by gold - a dollar representing claim to a given weight. Now we operate in a fiat system where money is backed only by government decreed - giving them the power to create money "out of thin air".  Whenever there's fiscal stimulus or "money printing" as some would have it, inflation fears arise along with demand for the gold standard.   But does gold really work as money?  Inflation happens where there's too much money chasing too few goods. Fiat currency can lead to this if we're not careful. Zimbabwe is notorious for hyperinflation.  However, managed properly, fiat currencies enables policymakers to adjust the money supply based on economic needs - smoothing out the cyclical ups and downs.  With the gold standard...

A single workout won't do much for your health. Reading a few pages won't make you much smarter. Meaningful results are a product of consistency over time. Today's reps are not today's results. True change comes from compounded effort. 

  When Roger Bannister first ran the 4 minute mile, it changed running forever. Broken records shake up preconceive notions and challenge our limits. Bannister's performance, a feat once considered impossible is now commonplace for runners.  If you pay attention to financial news, it'll appear that records are being broken everyday. The S&P 500 hitting a new high. The Dow suffering its largest drop. These headlines are dramatic but are they meaningful? In markets, things that never happened before ironically happen all the time. The novel is routine and nothing to fret about.  There's a lot of moving pieces in finance and endless combinations can occur to form a record-breaking narrative. These are largely cosmetic. The markets are rich with data, data that can be sliced and diced until you find something "historic". Timeframes, sectors, factors - tweak the parameters enough and you'll find something everyday. You can do the same in your life. When you had...

  I consume an embarrassing amount of financial media. I'm working on cutting back. If my avid consumption has taught me anything, most is just noise. Genuine insights are rare to come by and little is gained by paying such close attention.