Book of Wise Investors

When you invest, you want returns. However, there are many ways to measure performance and since investing in mutual funds is what the majority of us have to do in order to achieve financial freedoms or any other goals, it is important to learn how to measure performance. Most people measure fund performance by just simply looking at its historical returns. The rationale behind it is simple, if a fund is unable to achieve satisfactory returns in the past, what makes us think that it is going to do so in the future.

However, by basing your decisions on which…

Having different perspectives to a problem situation will result in better solutions surfacing. In other words, using multiple mental models to view the same problem situation. This is true in medicine as much as in equities investing also. Fundamental and technical investing may well be of different schools of thoughts but they actually got no conflicts.

Fundamental analysis involves looking over and analyzing the company three types of financial statements and business models while technical analysis is more towards observing and detecting price patterns and trends and developing strategies to exploit them. No amount of candlestick…

As mentioned earlier, an observation regarding the large discrepancy between the returns of small and large caps at any given year and that fact that this discrepancy last for several years mean that investors can generate greater returns than just simply buy and hold for more than 20 years. As you shall see in the following illustrations, one just needs to follow two simple steps when deciding to hold either all small or large caps ETFs in the coming year.

The stated asset allocation model is based on a single assumption.

As will be expected from historical data and the

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If you ask a woman how much does that LV bag costs, chances are she can most probably tell how much it cost within a dollar margin. However, if you ask her how much she pays “talented people” for professional money management, there is also a good chance that she got no ideas. There exists the same probability that she is paying much more for money management than for her LV bag. If there is a financial adviser managing her wealth, the fees will be around $3000 to $5000, coupled together with 1% fee for a $100 000 portfolios, which…

Being a fan of kungfu movies, especially the profound interlinking of blocks and punches unique to Wing Chun, the obvious movie of choice for me during this period of time will be Ip Man 2 and not really Iron Man 2, though I would recommend most to simply watch both. With the relatively good plot, theme music and fighting scenes of Ip Man 1, there was much anticipation to the sequel of the first Ip Man movie.

There is a Chinese saying of life experiences reflect movie stories and movie stories reflect life experiences, (人生如戏，戏如人生), it is due to the…

We buy physical properties, as well as other investment vehicles like stocks, for the purpose of earning a return much higher than inflation 5 years or more down the road. As we defer consumption for the purpose of having something to live on when the day comes that we cannot physically work, or simply don’t want to spend our life working for money, there is a need to do more due diligence when it comes to substantial financial investments like in the case of real estate.

Economics 101 tells you that when there are too much money running after too…

There is no doubt that when it comes to long term investing, of at least 5 years or more, value investing is the best investment strategy when it comes to stocks. What most people don’t know is that when it comes to physical properties, value investing, invented by Benjamin Graham, perfected by Warren Buffett, is also the best strategy, at least in my opinion.

The distinctive key of value investing lies in it using multiple benchmarks when deciding on the value of an asset, instead of subscribing to modern finance theory of prices of asset already reflect the value of…

First and foremost, there is a large discrepancy in performances when measured over more than 5 years period, between small and large caps throughout the decades. There are times when large caps stocks gained as much as 30% while small caps lost 2% or doubled in value. As a result, there have been greater returns than simply buy and hold ETFs that tracked the broad market when ordinary investors switch from small caps to large caps and vice versa at suitable times. The bad thing is neither your commission based financial adviser or mutual fund managers are going to decide…