Book of Wise Investors

Institutional investors are insurance companies, mutual funds, pension funds, index funds/ETFs, hedge funds, banks and other types of financial institutions other than those mentioned here. Together, they collectively managed trillions of dollars, shifting in and out of various investments every month and most of their equity investments are relatively well known mid to large caps. Due to the size of their capital, they usually will not invest in or take up large positions in small caps. Instead, they only move in and out of companies with proven earnings and shows some success in performance. In addition,…

The price of General Electric was trading at $10 per share 2 days ago, if an owner of the stock offered you 1000 shares at so called below market price of $8 per share, will you buy? Just like with stocks, even if a company still exists 10 years later, a below market price does not really tells you everything about its intrinsic value. In other words, simply buying a house below current market price does not mean that one can surely profit from great price appreciation in the near future of within 5 years.

The problems inherent in market…

From time to time, one often sees some make money from forex trading seminars (or options trading), with headlines claiming to enable you to make some 5 figures per month simply by staying at home and spend your life watching the forex screen and make 5 figures per month. I have some opinions regarding forex and options trading markets, and application of efficient market hypothesis in this aspect.

An efficient market is a market for which time, effort and money expended to exploit pricing inefficiency are unlikely to produce the benefits of producing excess returns consistently.

The classic $20 bill…

The New York Times best selling personal finance book, Rich Dad Poor Dad, once make a bold claim that your house is a liability, not an asset because he redefines an asset as something that put money in your pocket while a liability is something that takes money out of your pocket. As you shall see below, even based on this definition, your house is still an asset, not a liability. There is actually a reasoning fallacy in Robert Kiyosaki reasoning in his famous Rich Dad Poor Dad book.

Your house is a great asset because not in…

Ever since the increasing financial education of the population in general, there is an increasing trend in the belief of buys term and invests the difference when it comes to insurance coverage. That is because usually in most cases, the total premium paid to sum insured for a whole life policy is much more than that for a term with the same sum insured such that the difference invest in the equities market will result in a final amount that is greater than the sum insured for whole life at the end of the term life insurance, thus it is…

REIT stands for real estate investment trust and it is definitely one of the essential investment vehicles for the masses and high net worth individuals as well. Key reasons being that it allows small flies to participate in the ownership of many and diverse portfolios of physical properties with a relatively small amount of money and of course, REIT being an easy to understand business. In fact, they are the only cost-effective way for a low net worth individual to gain exposure to real estate investment without directly owning physical properties.

While REIT is not a totally risk…

Index investing is investing in all of the stocks under an index; it is even more diversified than any actively managed mutual funds. It includes buying into either index mutual funds and/or exchange traded funds that proclaim to invest in a certain index, i.e. hold all the shares that are under the index and rarely trades actively, unless there are changes in companies under the index.

The following aspects of each index are highly recommended to know. In fact, any savvy investor that got invests or going to invest using the index investing approach is well aware of the following…

I have a friend or a few who believes in one of the Abraham religions (the one with two lines at right angles to each other), he once mentioned that English is the global language and at the same time most widely used is because someone wants as many people as possible to read the book of the religion. Superimpose this with the percentage terminology in mathematics and the various factors believed to account for success in one’s career, relationships and businesses; you are going to get an interesting picture.

While I’m not into any of the three Abraham religions,…