Herman Ye

We're in the mist of a  decade-long  bull run, one of the most impressive stock market rises in history. When times are booming, doomsday predictions tend to dominate the headlines. "Markets hit all-time-high, sign of an oncoming collapse?" "A recession is overdue, we're getting closer." Yes, as time passes we get closer to the next recession. It's very easy to say we're closing in on something because that's how time works. The difficult part is knowing exactly when it'll happen. People are terrible at predicting recessions. Paul Samuelson (Nobel prize winning economist), in 1966 joked that declines in U.S. stock prices had correctly predicted 9 of the last 5 American recessions, and his profession would kill for such accuracy. A study by the IMF found from 1992-2014, of 153 national recessions, only 5 were predicted by a consensus of private-sector economists in April of the previous year. That's ~3% success rate. At the...

Reading a book won't make you a genius, eating a salad won't get you abs and buying a stock won't make you a millionaire. Successful investing ( like success in most fields ) require time and repetition. Nothing worthwhile is achieved quickly. Patience unlocks the power of compound interest. Investors who save and invest regularly in an appropriate portfolio will experience extraordinary growth over time. The ability to think long-term is one of the few advantages that individual investors have over professionals. Professional fund managers have massive advantages over individuals ( information, technology, manpower, etc. ), but they don't have the luxury of being able to think long-term. Most fund managers report performance quarterly and they want to show strong results every single time . They act for the short-term -  impatient investing . Impatient investing involves active trading. As we've discussed before, trading is very hard. Impatient investo...

The risk of losing money is understandably a big fear for investors. Investing is a great way to grow your wealth, but there's a tradeoff. The opportunity for your investments to rise is accompanied with the risk they might fall ( risk and reward ). Everyone's ability to handle risk is different, a risk-appropriate portfolio is key to successful investing. Investors taking on too much risk are likely to make poor decisions under pressure ( like  JR Smith  in the NBA Finals ). Investors who are too conservative are limiting their growth potential. Most portfolios are built with a mix of stocks and bonds. Stocks are typically riskier and provide greater returns, bonds are typically more stable and provide lower returns. A  paper  by PWL Capital found that stocks had an expected return of 7% and a standard deviation of 11.4%, while bonds had an expected return of 3.3% and a standard deviation of 3.9%. Standard deviation is the degree that returns deviate fr...

One of the major reasons people strive for a fully paid off house is the dream of living rent-free. The idea that homeowners don't pay rent is somewhat true,  like golf being a sport . Rent is money exchanged to use something without receiving  residual value . A familiar example is paying your landlord to use their property. You get a place to live, but when your lease is over, you don't own anything. This is explicit rent, it's obvious and easy to calculate. Another, less obvious type of rent is implicit rent. Implicit rent is not directly paid to anyone. It's expressed and paid in the form of opportunity cost. Opportunity cost is the cost of choosing one option and forgoing another. Like when the Portland Trailblazers decided to draft Sam Bowie (choice) ahead of Michael Jordan (opportunity cost). As a homeowner, you have a lot of capital tied up. Your capital could've instead be invested in the stock market. The growth you could have experienced is your...

Running out of money is a huge fear for retirees. Without proper planning, you could find yourself making an unexpected comeback to the office ( hey guys, I'm back...) .

There are three types of people on campus - students, professors and smiley people in vests. You see the latter waving around "free" frisbees and t-shirts. As a broke student, the prospect of free stuff was ( and  still is ) super intriguing. But as we all know, there's no such thing as a free shirt. They wanted a credit card application in exchange. As I'm not keen on selling my data, I politely declined. The moment always stuck with me. Why would banks work so hard to give away credit? There must be something in it for them. Well, you bet there is! Banks make  billions  off credit cards, this is how. Interest When you don't pay off your credit card in full on the due date, you will be charged interest on the balance. Average annual interest rates on credit cards are around  20% . This is an incredibly high price to pay and an insane return for the banks. When you consider that the average return of the stock market is about 7-8% , the return they ea...

Financial media is like all media, there is a lot of it and it comes at you from all angles. Your laptop, phone, TV, there's no escape. "Beyond Meat is rocketing to the moon, get in before it's too late!" "Household debt is out of control, the next crisis is coming. Sell now!" Endless "experts" looking into their crystal balls, pushing their opinions and presenting them as facts. No one knows the future. If they did, they wouldn't be broadcasting it. A poker player doesn't announce their cards to the table. Real information is kept to themselves to profit. Be skeptical of financial fortune-tellers -  or any fortune-teller for that matter . They're likely acting out of self-interest, promoting their own strategy or baiting for clicks. Rational minds acknowledge that markets are unpredictable and the future is unknown ( crazy, right? ). Despite the uncertainty of markets, decades of data demonstrate it trends up over time. ...

"Renting is throwing your money away." "You're just paying your landlord's mortgage." "My dad's friend's uncle's house tripled in value!"

My introduction into investing was with a big bank mutual fund. I was in university and knew as much about investing as Jon Snow knew about anything. I had some idle savings and was told it was the smart thing to do.

Let's play a game. We'll match up the strategies of two savers to see who ends up better off at retirement.