Investing How does Endowus calculate performance and what return metrics do we use? How to calculate dollar value gain or loss, total return, time-weighted rate of return, and annualised internal rate of return
ETFs & Funds The first index fund, ever, and an introduction to Dimensional Fund Advisors (DFA) You can think of the birth of index investing and what Dimensional continues doing today as just a part of the investing evolution, as curious scientists and practitioners continue to pursue the truth in the hope of a better future.
Investing Raja Ampat and the rewards of time rather than timing Raja Ampat lies on the edge of the Indonesian archipelago off the west coast of Papua. Apart from having the greatest marine biodiversity on the planet, magical coral gardens, and lots of fish, Raja is a stomping ground for the ginormous oceanic manta.
Investing The very annoying efficient market hypothesis and how to beat it Eugene Fama, 2013 Nobel Laureate, is credited with developing the Efficient Market Hypothesis, on which intelligent investment decisions can be made.
Investing A (lack) of forecast for 2019: the key to stock market predictions It’s safe to say that short-term predictions are fairly worthless, and paying attention to forecasts is a wasted effort.
Investing “Hindsight is 20/20” - we all love to say: why timing markets is difficult and risky Over the course of 20 years from 1970 to 1989, Japan market rose over 6,100%, US market rose 890%, and the rest of the developed world rose just over 1,100%.
Investing Are good investors skilful or just lucky? Michael Mauboussin believed that the reason why luck is so important in investing is not that investors are not skilful - it’s actually the opposite.
Investing "I'll invest when the market crashes" is flawed. It's about time in the markets rather than market timing Even the worst market timer can be a way better than average investor.
ETFs & Funds An inconvenient truth: tax on US-listed ETFs. Why US-listed ETFs are not necessarily cost efficient for you and me. Tax, if not careful, can shoot low-cost investing in the foot.
ETFs & Funds Spoilt for choice: ETFs vs Mutual Funds You walk into a restaurant, get seated, and you’re handed a book. It’s the menu masquerading as an encyclopedia - page after page, there are so many items to choose from that you can’t decide what to order.
Investing Who doesn’t like good value? The value risk premium in stock market investing One should have greater exposure to companies that are cheaper than their intrinsic value and how the market is pricing them.
Investing "Buying a bond only for its yield is like getting married only for the sex” - Benjamin Graham The media tends to almost exclusively focus on the gyrations of the stock market, but the bond market is actually the largest securities market in the world.
ETFs & Funds Mutual funds investing - what are TRAILER FEES and how they eat into your investment returns When you buy a fund, you may pay your bank or brokerage (the ‘distributor’) an upfront sales fee. But what is not immediately transparent is that the fund management company pays the distributor a recurring distribution commission, or ‘trailer fee.’
Behaviour Survivorship bias - Why you’re not seeing the full picture when it comes to fund management performance Survivorship bias can be quite significant for the long-term investor because it can distort performance figures. As you can see, less than half of the equity funds and 57% of the bond funds survived over the 15-year period.
Behaviour Pizza massively outperformed Amazon and Google Let’s rewind to the start of this decade. If you had to choose one stock through the decade for the best returns, would you have bought the cutting edge tech titans (Apple, Google, Amazon) or a company that delivers greasy pizza to your neighborhood at discount prices?
Investing That’s why I chose Yale: the endowment investment model 34x returns. That’s how much you would have made if you invested with the Yale endowment fund over the last 30 years. The Yale Investment Office has had annualized returns of 12.5% during this period.
Investing Is wine a good investment? The liquid illiquid asset. Wine as an alternative investment has seen growing interest. There are various ways to invest in wine during and after its production.
Investing The art of (trade) war Trade is not a zero-sum football game, where the US only wins if China loses. The IMF simulated what would happen if the US imposed a 10% tariffs on all imported goods: it showed that US GDP would go down by 1% and the rest of the world by 0.3% over the long-term. Everyone loses.
Investing Dear Ms. Kusama, how many dots did you paint? The wisdom of the crowds and market pricing If you’ve ever played the “guess the jelly beans in a jar game”, you can see the wisdom of crowds in action. Most guesses are way off, but what is interesting is that when you have a large enough group, the average answer tends to be highly accurate.
Investing It’s a big world out there: investing beyond the US market. Over the last decade, the S&P 500 Index has destroyed the MSCI Emerging Markets Index (MSCI EM) by a large margin. The S&P 500 has had an annualised return of 9.73% versus the MSCI EM’s poor 2.99%. However, since its inception in 1988, the MSCI EM has outperformed.
Investing Alpha alfalfa: the value of having a financial adviser Pick a good advisor, and expect “about 3%” in extra net returns per year. That is A LOT: An annualised return boost from 7% to 10% on a $100,000 investment means you are over $280,000 richer after 20 years.
Investing Risk it for the biscuit: Volatility and risk are not the same thing Many investors often use volatility and risk interchangeably, and while they are closely related, they are not by any means the same thing.
ETFs & Funds Be critical in this ETF love affair ETFs, for the most part, are passive instruments that track the returns of a benchmark index rather than trying to beat the market. Many investors are surprised to learn that some ETFs do not exactly track the indices they were created to mimic.
Behaviour Tulips, dotcoms, and the weak human mind: Warren Buffett says, “Be fearful when others are greedy, and greedy when others are fearful.” But we are socially conditioned to follow the crowd, and herd behaviour has been proven to intensify during bubbles and financial crises.
Investing Choosing the right rocks (& stocks) Nobel-Laureate Professor Fama and Professor French use price-to-book, or the price of a company's stock versus the value of its assets, to determine value.
