The Power of Passive Investing

At the start of 2008, Warren Buffet made a million-dollar bet with the CEO of money management firm Protégé Partners. He bet on an index fund that invests in the S&P 500, while Protégé bet it could pick five “funds of funds” that would perform better. His side Warren Buffet’s thesis that the best thing a young man could do was to put his money in an ETF tracking the S&P 500 and just forget about the money. The compounding

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Financial Bubble

What is a financial bubble? How does it evolve? How can we protect ourselves from a bubble? I will try to answer these questions in this post, as this subject is always relevant but somewhat more relevant today when some assets are being traded near all-time high levels. A financial bubble (or economic bubble) happens when the price (e.g., market value) of an asset greatly exceeds its fundamental value, which is the value according to standard economic methods of valuation,

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Follow the Money (and the Millennials)

Once there were Baby Boomers and Gen x’s, and they lived happily. They had brands they really liked along with their favorite beers, cereals, and department stores. They also had their particular way of consuming—looking for a specific physical location, buying lots of things they didn’t necessarily need, and essentially really liking certain products. Then came the millennials, who are less of a brick-and-mortar kind of people. Millennials want to buy everything online. They want everything delivered to them very quickly,

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The Eighth Wonder

Compunding

Lacking financial literacy, many people are unaware of what might be the most important factor for increasing your own capital. It’s a term that Albert Einstein referred to as “the greatest mathematical discovery of all time” (and Albert Einstein knew something about math) and “the eighth wonder of the world.” If there is anything you need to know about finance, it’s Compound Interest (Compounding). But compounding is not just math or finance. It’s a more profound idea than it may seem

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Vocabulary for the Solid Investor

In the last few weeks, I have received some feedback saying that I have put the cart before the horse, and that some readers first need to understand the basic ideas and concepts of investing. I strongly believe in strengthening financial literacy, so I immediately thought about discussing important vocabulary terms for the new investor, who will hopefully become a solid investor. This discussion will not follow a strictly ABC approach but rather focus on the order in which a

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Does the President Really Influence the Economy?

Presidents come and go (in democratic countries), but they often leave their mark. They mark the country politically, economically, and even culturally. The president of each country is considered to be the most influential person in the country, and the president of the U.S. is considered to be the most influential person in the world. In most countries, the economic state of the country is likely to decide the winner of the elections. We all remember Bill Clinton’s saying “it’s

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How to Invest in Global Warming

This post will start with a disclaimer. Writing about climate change can be very controversial. In the U.S., some might consider it a political statement, but there is a worldwide consensus that global warming is indeed happening. While liberals usually consider global warming as something influenced by humans, some conservatives agree with the facts regarding climate change but believe it’s a result of other factors and not necessarily caused by humans. It’s one of those debates that will last forever,

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Buying a house—A wise financial decision? (2)

In the previous post, I discussed whether or not buying a house today is a smart financial decision. I recommend reading it before reading this post, but if you’re a millennial who hates to read a lot, then the short answer would be no. Or probably not. Not everyone wants to buy today. Some are considering various alternatives for investment. Some do not have enough free cash flow, while others are waiting for a bubble to explode. Among millennials, some

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Buying a House—A Wise Financial Decision? (1)

Buying a house can be the most important financial decision you’ll ever make, especially if you live in coastal areas, where real estate prices tend to be higher. In a series of posts, I will consider how wise it would be from an economic perspective to buy a house today. I will not discuss psychological factors involved, for example, most people want to live under a roof of their own, or some other practical factors—you are very limited in being

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What’s the Deal with Cryptocurrencies?

One of the trendiest subjects in the financial and technological world is cryptocurrencies. According to Wikipedia, the definition of cryptocurrencies is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Cryptocurrencies are part of a technological revolution, but the scope of this post is to determine if they are part of an investment revolution. Many people are talking in favor of investing in cryptocurrencies and are definitely

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