SN Finance Blog

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice. ────────────────── The Paradox of Investing: If people know how to make money by buying low and selling high, why so many people still lose money investing? Because they buy when they think it is low and they sell when they think it is high. They believe the asset is low and hence buy. They believe the asset is high and hence sell. Issue is not with the methodology of buying low and selling high but with one's perception and evaluation of what is truly low and truly high.  A misalignment in one's perception of low and high with reality results in investors losing money — selling when they think it is high and buying when they think is low. What matters is not what they think but what it really is. Because high and low are subjective, it depends on one's perspective and evaluation of w...

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice. ────────────────── What's the best way to tell if you're buying your stock based on fundamental or technical analysis? If you're buying your stock based solely on technical analysis, then chances are, you're unlikely to buy it at all-time highs because technical analysis will usually wait for pull-backs to buy at correction points. The exception would be bullish techncial indicators showing a strong rally ahead despite all-time highs. However, the norm is that using technical analysis will usually result in you not buying stocks at ATHs.  Fundamental analysis on the other hand is completely independent of technical analysis. You buy stocks based strictly and solely on your intrinsic value of the stock. If the stock is trading at ATHs but below its ATH you'll still buy the stoc...

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice. ────────────────── People often associate times of panic with risk. People avoid the markets and hoard cash because of fear — fear of the supposedly higher risk during bad times. Contrary to popular belief, market downturns are often not as risky as people think. Naturally, people associate a huge sell-off with risk. They see equity prices falling and as such avoid them because they believe they are risky. But when everyone believes the market is risky, the market becomes inherently less risky because people become more risk-averse. And the more risk-averse the market is on average, the less likely prices are to be inflated.  The lower the price, the lower the risk as you stand to lose less. During times of strong market optimism, people tend to throw caution to the wind — investing i...

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice. ────────────────── Risk is good in moderation. Much like stress, risk enables you to achieve positive and desirable outcomes. But too much of it can kill you. Risk is the probability of harm materialising. In other words, uncertainty. But unlike risk, uncertainty is not inherently bad and undesirable. Uncertainty is both good and bad. Too much uncertainty is certainly bad but no uncertainty is certainly not good either. Life would be both mundane and boring without uncertainty. Living a life of perfect certainty is not living at all. If you already know all that will happen, you have already lived through it all, and therefore whatever we are living now is merely a repetition of what you have already lived through, through your foresight. An aspect of risk is uncertainty. To be perfectly certain ...

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice. ────────────────── Right risk = risk which pays off Taking risk important to achieve returns. But taking risk alone isn't sufficient for returns. One needs the right risk to achieve returns. Simply blindly accepting more risk does not mean you will have higher returns. You have to ensure the risk works in your favour. The risk must be well-managed and most importantly, be commensurated with returns. Risk without returns is useless. No one will take risk without returns. Yet, people still make risky decisions which don't pay-off. Making decisions rashly based on emotions is a cause. Another which is confusing between foreseen risk and unforeseen risk. People invest in assets they believe is worth the risk. And when they make poor investment decisions, they believe it is due to their forese...

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice. ────────────────── If you compared the level of financial literacy today relative to decades ago, you would definitely agree that it has improved, both in Singapore and globally. Investors today are more savvy and well-informed, largely due to technology and better access to information today. But what are the implications of this? Firstly, the average investor will perform better than they did in the past. Meaning, more money is being placed in the right assets, fueling growth (and hence prices) in these assets, which is great for the economy. The more financially literate and savvy investors are, the more efficient the financial markets are, as capital is being supplied to entities which are able to make the best use of them.  Right assets are assets which have the greatest growth prospects...

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice. ────────────────── Maximising returns is not all about achieving the highest returns in your investment but it's also about how you approach your investment journey. I would rather not achieve maximum returns if it is at the great expense of other important things, for example, time with family, leisure time, social interactions, sleep, etc. Here's an example. We have two individuals: X and Y X achieves a 25% p.a. return on his investment by spending 6 hours each day researching and managing his trading and investment portfolios, on top of his full time job. Similarly, Y also has a full time job. But unlike X, Y chooses to prioritise his time for under important things like time with his kids as well as leisure time with his family and friends. As such, X chooses to "sacrifice" ...