Herman Ye

A best practice in portfolio management is to own many companies across many sectors, countries and sizes. Reducing the risk of one bad apple spoiling it all. Diversification, the only free lunch in investing, produces better returns with lower risks.  Diversification is helpful beyond investing.  Retirement is a trying time. This is most clear with pro athletes. Countless examples of downward spirals and overnight bankruptcies. We're just as susceptible. Many retirees report depression and anxiety due to loss of identity and structure. So much of us is tied to our careers, when it ends, it's devastating.  This is why we diversify. We're more than our jobs. We are sons, daughters, parents, athletes, book nerds, investors, gamers, and so much more. Work is a single slice of a much bigger pie. It's foolish to save our best self for one and neglect the rest.  When we feed other areas, we become more resilient. A bad meeting doesn't destroy us because we were still...

In high school I wanted to be fit so I could be better at basketball. Really I just wanted to dunk.  Never happened but it sparked something that would serve me long after my hoop dreams faded.  Wanting to be fit led me to learning how, which led me to training well, which made me feel good, which made me keep at it. I learned more, trained more, felt better and on and on. Wrapped up in this positive feedback loop, decades later I continue to reap the benefits. A lifelong passion for fitness, where making healthy choices has never been a chore.  Feedback loops are powerful and are all around us.  Costco provides quality goods at low prices, this leads to more memberships, which leads to more sales, which gives them more leverage over suppliers, which enables lower prices...  Feedback loops can also go astray.  Drinking soda feels good, so you drink more. You gain weight, feeling bad you drink more to feel good again, which leads to more weight.... Cycles ar...

Focusing too much on how much . Many companies measure success based on how many things they can build. For tech companies, it's features, for factories, it's widgets.

Hey, it's been a while!  You may have noticed that the blog has been a tad quiet lately. Our first break in the action since roughly 2 years of weekly posting. There's a good reason.  I covered a lot of what I wanted to in investing & finance. While there's always more, the core was covered and I felt I was getting repetitive.  TLDR: think long term, be rational, and compound that interest.   During my break, I explored other interests. Business, health, technology, and more. There's a lot to learn, and writing is a great teacher.  Going forward, I'll be covering a wider range of topics. No set theme, just whatever I'm interested in the moment.  Given the broaden scope, we've outgrown our beginning banking roots. I'm going to rebrand to simply hermanye.com.  I'm excited to write again and welcome you all to the ride. 

So you've landed an awesome job. Good on you! You skim over the package and see a retirement savings program. Even better! In Canada, these plans typically come in two shapes. A Group Registered Retirement Saving Plan (RRSP) and a Registered Pension Plan (RPP), aka a Defined Contribution Plan. Let's see how the two compare.  Starting with the similarities: Employer contributions and employee matching. This is w hy we love these benefits . Employers will contribute a percentage of your salary automatically to your account. On top of that, they will match a portion of your contributions. Who doesn't love free money? You'll also get a choice in what to invest in - though within the constraints of the plan provider. They'll unusually have a small menu of funds. Try to find the lowest fee option that meets your needs.   Onto the differences: The tax treatment is actually the same...but different. Both plans allow you you grow your money tax free. The difference is in ho...

Self-driving cars, NFTs, AI, SPACs - what a time to be alive. With so much excitement and promise, investors are jumping in to invest in seemingly world-changing projects. It's a fun time to trade. Endless options, big gains, compelling stories. Even I've been tempted to join the fun.  The lack of fun is the cost of admission when you choose to index. Speculation is taken off the table. You'll never get rich quick. Volatility will be limited. Never will you double your money overnight. Swings of about 10% is as exciting as it gets and these days are few and far between. You'll never have amazing stories about how you were able to successfully buy the dip of a EV stock that has since tripled. You'll never be able to brag about buying Amazon at 10 bucks. You'll never play visionary by yoloing into Bitcoin because you knew it was the future.  Active and concentrated portfolios lead to great stories (good and bad). Passive and diversified ones lead to snores. No one...

It's that time of the year. Bonus season! You got a great review and the numbers to match. You've already made big plans for it. Then the day comes. What?? It's half what I expected. Why are my taxes so high?  This sticker shock is very common. Don't be alarmed, it's not a mistake. Just standard payroll practices. It's important to remember that taxes are truly only assessed ( and paid ) once a year - when you file. All the other times you're " paying taxes " is just your payroll friends pre-paying for you. Payroll withholds from your paycheck to make sure you don't get a giant tax bill come filing time.  Payroll can only estimate your annual earnings. They have no idea how much you'll make throughout the entire year. So their software will treat every paycheck as if this is how much you'll make every period ( wouldn't that be nice ). Your bonus is probably multiples of your regular paycheck and this puts you in a much higher tax br...

We saw a bit of red in the markets this week. The S&P 500 was down about 2%. Not a huge drop, but after seeing mostly green for a few months, even moderate losses are jarring. We got used to winning. The drop was largely attributed to a rise in interest rates. Similar to its relationship with bonds, interest rates and stocks tend to move in opposite directions. When rates go up, stocks fall (and vice versa). This is broadly speaking of course. There's no exact way to explain stock movements, especially in the short term. Too many factors at play. Alas, the logic is generally sound. When interest rates rise, money becomes more expensive. For businesses, the greater borrowing cost eats into their earnings. Reduced expected earnings trickles down to reduced stock prices.  For investors, when safe assets start yielding more, they become an attractive alternative. Low rates meant stocks were the only game in town. Investors would rather take a chance with stocks than earn nothing w...

Last summer, Apple's stock price went from $500 to $125. On face value, this shocking. A drop of 75% for one of the world's most successful and beloved companies. Are iPhones the next BlackBerries? Was there a scandal with Siri? Nope. The reality is much more boring.  It was a matter of corporate accounting. Apple did what many public companies do from time to time. They increased their number of shares - by splitting them. Stock splits can happen in many fashions. 2-for-1, 3-for-1, you get the picture. In Apple's case, 4-for-1.  This means Apple 4x their shares outstanding. Their overall value remained unchanged. Just more shares, worth less a piece. Seems like a lot of work to get back to same place, no? There's a reason. Stock splits help increase access. As a stock rises, it becomes more and more difficult to buy. Berkshire Hathaway is a prime example. Through decades of compounded success (and never splitting) a single share is now trading well over a whopping $300...

If you want to get in shape, turn to the fittest person you know. Do exactly as they do and you're on your way, right? Caution, I know some really fit people where pizza is half their diet. Following their footsteps will gain you nothing but pounds. We're all different (genetics and such). Them being in shape doesn't mean they know how to get you in shape. The same holds true for wealth. The media loves to interview billionaires. Where are we in the cycle? Where are we going? What should we do with our money?  There are definitely smart folks in the bunch we can learn a lot from. Warren Buffet is particularly quotable. But being rich in and of itself doesn't mean you have all the answers. Most folks become successful through a combination of skill and luck. The spectrum goes from hard work and smarts (skill) all the way to being born rich (luck). Skill is often overstated while luck is ignored. Luck can't be taught. This is why lottery winners don't give TED Ta...