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“Hindsight is 20/20” - we all love to say

December 15, 2018

Trying to asset allocate tactically by market is not easy. Passively’ owning the S&P 500 only this actually an active decision that forgoes...

Let’s rewind to the early 70s:

Nixon was President.
Mao was Chairman.
Elvis was on tour.
The first pocket calculator was released.
Japan’s stock market was the darling of the investment world.

From 1970 to 1979, Japan’s stock market was up 396% versus the US, which was only up 77%.

Then the 80s happened:

Michael Jackson released Thriller.
E.T. was the highest grossing film of the decade.
The War on Drugs began.
Apple Computer introduced Macintosh.
Japan’s stock market remained the darling of the investment world.

From 1980 to 1989, Japan’s stock market was up 1,143% versus the US, which was only up 404%.  

Japan’s stock market grew so big that it accounted for 45% of the global stock market cap. The US followed at 33%. Eight out of ten of the largest corporations in the world were Japanese.

And the 90s were interesting too:

The World Wide Web arrived.
Friends and Seinfeld ruled TV.
We all bought a Discman.
Microsoft hit its stride.
Global warming became a concern.
Japan’s stock market lost itsluster.

From 1990 to 1999, Japan’s stock market was down 7% versus the US, which was up 433%.

The 2000s were globalising:

The iPod showed up, then the iPhone.
9-11 shocked the world.
Euro was adopted.
Google and Facebook connected all of us.
The global financial crisis.

From 2000 to 2009, Japan’s stock market was down 30%, the US was down 9%, and emerging markets led the pack, up 162%.

Decade-by-Decade Returns of Global Markets (USD)

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%.

How would you have positioned your investments for the future at that point in time? It would have been easy to say Japan was overheating after the 1970s, but you would have missed another ten years of Japan’s dominance.

In the following 27 years from 1990 to 2017,
Japan returned a pathetic 120%,
The US returned 1,374%,
and the rest of the developed world rose 1089%.

Trying to asset allocate tactically by market is no easy feat. Some investors say they want to ‘passively’ own the S&P 500 only, but this is actually an active decision that forgoes most of the world.

We prefer to own a truly globally diversified portfolio - one that we can stick with through geopolitical, economic, and pop culture shocks.

It will likely not be the best performing portfolio at some points in time, as it will be dragged down by its level of diversification. But that being said, it will avoid the far bigger evil: periods of missing out on stock market growth in other parts of the world.

If you enjoyed reading this article from The Know, you can subscribe to our weekly newsletterFollow us on LinkedIn or connect with us on Facebook as we bring you financial insights from endowus.


How the 0.001% invest (The Economist)

This San Francisco investor wants to revolutionize private equity. Is he crazy? (Institutional Investor)

A surprising push by the invisible hand: Why more companies are doing better by being good (Forbes)

Startups aren't cool anymore (The Atlantic)


2019 forecast: Predictions will be wrong, random or worse (Bloomberg)

Why do so many people fall for financial scams? (The Economist)


Laws of attraction, dating and factor-based investing (Business Times)

Singapore's US$200k starter salaries: Why education pays the price (SCMP)

All together now: The growing co-living scene in Singapore (Business Times)


Jeffrey Sachs: The war on Huawei (Project Syndicate)

Uber is headed for a crash (NY Mag)


TED: What does everyday courage look like? (NPR // 12 mins)

Good to Know

How Tim Cook, CEO of Apple – who buys his underwear in sales – spends his US$625 million fortune (SCMP)

Real crazy rich Asian wedding to cost $100 million (Bloomberg)

Why are we still so fat? (NY Times)

The joy of no-gift Christmas (The Atlantic)

2018 wasn’t a complete horror show. Here are four things that probably got better. (Vox)

Researchers found one way that long-term marriages get happier (Qz)

Your apps know where you were last night, and they’re not keeping it secret (NY Times)

What to expect when you're expecting

November 3, 2018

When you invest, you expect to get the return due for the risk taken.  


We are creatures of habit. When you go to your favourite coffee shop, you expect to get that same coffee, made by that same barista. When you go to that Thursday morning yoga class, you expect to see your favourite yoga instructor. When someone you have never seen before skips into the room and takes the instructor mat, you sigh a little and shake your head before getting on with the class.

When you invest, you expect to get the return due for the risk taken. An example: if you buy an index fund or ETF tracking the MSCI All Country World Index, you will expect it to give you an annual return in-line with its long-term average (minus costs). Though the long-term average is an indicator of what to expect in the long-run, there are very few single years of return that will fall anywhere close.


MSCI All Country World Index annual return minus average annual return (USD)

In the 23 years from 1995 to 2017, only 6 years fell within a 10% range (+/-5% radius) of the long-term average annual return of 9.12%.

Furthermore, the best and worst 12-month return in the period ranged from +59.0% to -47.9%. This is an enormous dispersion of returns.

Each year is made up of 365 days of ups and downs, sweaty palms, hair-raising news, and your beating heart. It is not easy to patiently allow the fluctuations to work themselves out.

Diversification does remove some volatility, but if you expect to achieve anything close to the average annual return every year, you will be sorely disappointed and should probably steer clear of equity markets.

Ignore the desire for gratification in getting what you expect and try to ride out the market fluctuations, knowing that you have positioned yourself for long-term investment success.

If you enjoyed reading this article from The Know, you can subscribe to our weekly newsletterFollow us on LinkedIn or connect with us on Facebook as we bring you financial insights from endowus.
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Start-ups ask, ‘Are we making money for Saudi Arabia?’ (NY Times)

How Pony Ma went from Halley’s Comet to building Tencent (SCMP)

Ubernomics: The social costs of ride-hailing may be larger than previously thought (The Economist)


Banks struggle with global payments that look easy for Venmo (Bloomberg)

Paul Volcker’s guide to the almighty dollar (The Atlantic)


Singapore ousts Hong Kong as No. 1 for luxury home-price gains (Bloomberg)

Raise CPF withdrawal age amid growing lifespans (Business Times)

Singapore's PropertyGuru raises S$200m funding from KKR (Channel News Asia)


‘Superstars’: The dynamics of firms, sectors, and cities leading the global economy (McKinsey)

Inside fortress Maotai: secrets of China hard liquor that’s rocket fuel for its soft power ambitions (SCMP)


Blacklisted in China: China's social credit system (NPR // 20 mins)

Good to Know

The story of how Kit Kats became a booming business from Hokkaido to Tokyo — and changed expectations about what a candy bar could be (NY Times)

Superfoods are a marketing ploy (The Atlantic)

In China, the future of retail is already here (Bloomberg)

WeWork's first school teaches math and science but yoga and farming, too (CNN)

Sea cucumbers lead China’s logistics blockchain charge (Technode)

The big meltdown (National Geographic)


Are you skilful or just lucky?

October 20, 2018

With luck on one end and skill on the other, where does investing fall on this scale?

“I think it may be true that fortune is the ruler of half our actions, but that she allows the other half or a little less to be governed by us.”
- Niccolo Machiavelli in “The Prince”


Credit: Jimmy Chin, National Geographic

On June 3, 2017, Alex Honnold scaled El Capitan “free solo” without a rope: he climbed a 3,000-foot vertical granite wall with his bare hands and some chalk, in what is probably the most impressive feat in sporting history. 3 hours and 56 minutes of sheer concentration, strength and most importantly, skill.

Buying Tencent a year ago at $354, and watching it go up 34% in 3 months to $474, then crash 40% to $282 - that can be attributed to good luck followed by bad luck.

The influence of luck on outcomes has been understood for a long time. Despite having every manipulative trick up his sleeve, political mastermind Niccolo Machiavelli acknowledged the role that luck played in successful outcomes in his handbook for future rulers. Five centuries later, Michael Mauboussin wrote about the difficulty of distinguishing luck from skill in business, sports and investing in “The Success Equation”. He shows how different activities sit on the scale of luck and skill: Chess sits on the far right of the chart (pure skill), and slots machines sit on the far left of the chart (pure luck). Where does investing fall on this scale?

Nobel Laureate Eugene Fama and Ken French published a paper ‘Luck versus skill’, where they analysed the performance of over 3,000 US mutual funds from 1984-2006 through the lens of their Fama-French 3 factor model (i.e. adjusted the performance for the excess risk that the funds took).

They discovered that in aggregate, the entire active fund universe underperformed the market by about the fees they charged their investors.  

Naturally, some funds outperformed and some funds underperformed. How much of that outperformance was due to skill and not luck? Professors Fama and French determined that only the top 3% of mutual funds outperformed consistently net of fees. But “the number that did outperform the market with a high degree of certainty was less than what is expected by random chance.” (Source: IFA)

Mauboussin believed that the reason why luck is so important in investing is not that investors are not skilful - it’s actually the opposite.

Imagine if AlphaGo, Google DeepMind’s champion-beating computer program, played against itself. The winner of each game would be more dependent on luck, as skill would be the same. This is an extreme example, but the same applies to investing.

Investors are smarter, more skilled, and have access to more information today. Collectively they have become more efficient at incorporating information into stock prices.  As a result, the outcome becomes more uniform with less dispersion of good and bad outcomes. Mauboussin calls this the paradox of skill (Source: CNBC):

As skill improves, as the average skill level improves, it actually increases the dependence of luck in determining results. Perhaps recognizing the importance of luck in investing (and life) is a skill in itself.

The more dependent an outcome is on luck, the more important it is to focus on the process. If you rely solely on luck, you may get to a good (or poor) outcome with some random probability.

A good process will give you the highest probability of achieving successful outcomes over the long-term. If markets have taught us anything - it is to be humble and admit that we are not all ‘above average’, and we do not know what the future holds. Instead of gambling our hard-earning savings and relying on luck, we would rather invest with and stay committed to an evidence-based disciplined process.

If you enjoyed reading this article from The Know, you can subscribe to our weekly newsletterFollow us on LinkedIn or connect with us on Facebook as we bring you financial insights from endowus.
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The Chinese phone giant that beat Apple to Africa (CNN)

It’s better to be born rich than gifted (Washington Post)

Four out of top five most successful women entrepreneurs globally are Chinese (SCMP)


Not filthy rich enough: The billionaires too poor for 2018's Forbes 400 (Forbes)

Hedge fund stars crying uncle gives industry hope (Bloomberg)

The next recession: How bad will it be? (The Economist)


Malaysia’s Rosmah Mansor, Singapore’s Ho Ching: BFFs? You must be kidding! (SCMP)

FA managed portfolio services gaining ground (Business Times)

Singapore outclasses Hong Kong when it comes to minimum home size (SCMP)


Charles Schwab has a $3.6 trillion edge on the Fintechs (Bloomberg)


Moneyland: The shadow world of the super rich and how their money moves in shell companies and offshore accounts (NPR // 21mins) 

Good to Know

Banksy auction stunt leaves art world in shreds (The Guardian)

‘Made in China 2025’: How 5G could put China in charge of the wireless backbone and ahead of the pack (SCMP)

Why would anyone ever pay $558,000 for a bottle of wine? (Bloomberg)

The retreat from meat: Why people in rich countries are eating more vegan food (The Economist)

Jamal Khashoggi: What the Arab world needs most is free expression (Washington Post)

We can now customize cancer treatments, tumor by tumor (MIT Technology Review)

Original Microsoftie: Paul Allen (The Economist)


Finding patterns where there are none

May 25, 2018

We humans are wired to find patterns, even when they don’t exist. It’s why people see faces in nature, religious figures on toast and come up with...


Jackson Pollock photographed at work by Hans Namuth

Let’s play a few rounds of roulette. Which outcome is more likely?

Red | Red | Red | Red |Red |Red |Red |Red

Red | Black | Black | Red | Black | RedRed | Black

The first outcome seems rigged. Intuitively, the second outcome seems more likely because it looks more random and exhibits less of a pattern. But in reality, both outcomes are equally likely. Each roulette spin is independent, and on each spin you have a 47.4% chance of hitting red or black. The outcome of each spin is not influenced by the previous spin, and cannot affect the upcoming spin in any way. The belief that if something happens more frequently than normal during a given period, it will happen less frequently in the future is called the gambler’s fallacy.

We humans are wired to find patterns, even when they don’t exist. It’s why people see faces in nature, religious figures on toast and come up with conspiracy theories. (Read Scientific American for more on Patternicity) When Apple first launched the iPod shuffle, people complained that the ‘random shuffle’ wasn’t random enough because they would sometimes hear the same song twice. The truth was, Apple did too good of a job in making it truly random, which meant that it didn’t take into consideration whether a song had been played recently. They had to later change their algorithm to be less random to seem more random.

We also tend to make investment decisions based on seeing historical patterns and trends that may amount to little more than random chance. We love to draw price charts and find ‘Head and Shoulders’, ‘Double Bottom’, or ‘Triangle’ patterns, then predict where prices will go. But this is largely an exercise in futility. British mathematician and philosopher Frank P. Ramsey proved that randomness will always exhibit some patterns, no matter how complicated you make a system. Basically, he showed that given enough variables to play around with, you can find any pattern you want.

We try to find rhyme and reason in everything. Things happen and we look for an explanation, finding meaningful patterns in meaningless noise. It is important to ignore the noise, stay disciplined in following time-tested empirically-proven investment plans, rather than be swayed by your human condition.



Opening the gates: Chinese travellers of all sorts have become ubiquitous (The Economist)

Banks adopt military style tactics to fight cybercrime (NY Times)

Why China’s payment apps give U.S. bankers nightmares (Bloomberg)


Mohamed A. El-Erian: Managing the risks of a rising dollar (Project Syndicate)

Markets may be underpricing climate-related risk (The Economist)

China's got a $46,000 wealth gap problem (Bloomberg)


Billionaire Cheng family grabs more land in Singapore for record price (Forbes)

Go-Jek to launch in Singapore (Straits Times)

Singapore passport no longer the most powerful in the world (SCMP)


How the math men overthrew the mad men (New Yorker)


60 mins: How did Google get so big? (CBS News // 13 mins)

TED: How do great leaders inspire us to take action? (NPR // 18 mins)

Good To Know

Does anyone want to hear my internal voice? MIT's device can read your mind (NY Mag)

How income affects the brain (The Atlantic)

Here’s how much money you need for bankers to think you’re rich (Bloomberg)

Following a tuna from Fiji to Brooklyn - on the blockchain (Wired)

The Marshall Islands replaces the US dollar with its own cryptocurrency (The Verge)

Thoroughly modern Meghan (The Atlantic)

Bitcoin estimated to use 0.5% of the world's electric energy by end of 2018 (EurekAlert)

+What the Mona Lisa tells us about art in the Instagram era (NY Times)

Survivorship bias -  Why you’re not seeing the full picture when it comes to fund management performance

May 18, 2018

Wouldn’t it be great if every time you made a poor decision in life, you could just rewind and erase it? Turns out - this actually happens in the fund


Tom Hardy in Dunkirk. Courtesy of Warner Bros.

Wouldn’t it be great if every time you made a poor decision in life, you could just rewind and erase it? Turns out - this actually happens in the fund industry. If a mutual fund performs poorly and shuts down, it’s booted from peer average calculations as you can no longer invest in it. The historical performance you’re looking at only reflects the ‘survivors’, which means that the average performance figures are probably rosier than they would be if the funds that crashed and burned were included.

Survivorship bias can be found everywhere.

  • During WWII, the British military wanted to learn how to best protect their planes from enemy gunfire. They focused on reinforcing areas of the planes that returned to base with the most bullet holes, as they reasoned that the bullet holes showed where these planes were getting hit. Hungarian mathematician Abraham Wald saw the fallacy in this - they should instead reinforce areas where the surviving planes weren’t getting hit. The planes could clearly survive a strike on those points riddled in bullet holes.
  • Long Term Capital Management (LTCM) was a hedge fund that nearly brought down the global financial system. A leading index of hedge fund data contained LTCM’s data prior to its collapse, which had an annualized return of 32.4% from inception in Mar 1994 to Oct 1997. This inflated the hedge fund industry’s overall results given LTCM’s size. LTCM stopped reporting data from Oct 1997 until its demise a year later, when the fund lost 91.8% of its capital and was eventually liquidated.

Perhaps it would not be such a big deal in the investment landscape if only a minority of funds closed down and this was just a marginal trend. Unfortunately, you may be surprised by how many mutual funds become obsolete over time.

*Winners are funds that survived and outperformed their benchmark over the period

Source: Dimensional Fund Advisors: Mutual Fund Landscape (IFA)

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. Taking into account all those funds that vanished would paint a very different picture from the ‘average’ fund returns. Vanguard published a research paper titled ‘The Mutual Fund Graveyard’, which concluded that ‘not accounting for closed funds can lead to a false perception of the probability of success.’ For example, for the five years ended December 31, 2011, 62% of surviving large-cap value funds outperformed their style benchmark. However, accounting for those funds that closed would reduce that percentage to just 46%.

This analysis swings our perception from optimistic about the ability to pick a fund manager who can beat their benchmark, to feeling cheated, with the odds no longer in our favor. We cannot analyze the planes that were shot down and decaying at the bottom of the ocean, but what we can do is be aware of survivorship bias and understand the limitations in looking at historical data when investing. 



Private equity’s plan to beat the low-cost investing robots (Bloomberg)

At Toys 'R' Us, a $200 million debt problem could lead to $348 million in fees (NY Times)

Inside Shanghai's robot bank: China opens world's first human-free branch (The Guardian)

Robinhood founders are billionaires in Silicon Valley minute (Bloomberg)


Little rice, lots of dough: Xiaomi eyes a giant Chinese IPO (The Economist)

For hedge funds, smaller is better (Institutional Investor)


Fintech battle pits biggest Singapore bank against China giants (Bloomberg)

Razer chose to list in Hong Kong. Has Singapore lost its competitiveness? (Channel News Asia)


How China's tech revolution threatens Silicon Valley (The Atlantic)


Tim Cook in Duke's commencement speech:"Be Fearless" (Big Think // 14 mins)

Has Tencent lost Its mojo? (Supchina // 17 mins)

Good To Know

A stunning, sudden fall for Najib Razak, Malaysia's 'Man of Steal' (NY Times)

Why age tends to work in favour of happiness (The Guardian)

The wisdom of running a 2,189-Mile marathon (The Atlantic)

This is Uber’s vision of the flying car (Recode)

This brilliant strategy used by Warren Buffett will help you prioritise your time (Inc)

‘China’s Hawaii’ looking for 1 million new residents, more than the population of Stockholm (SCMP)

The biggest surprises from the $833 million Rockefeller sale (Bloomberg)

Man used change of address form to move UPS headquarters to his apartment (NPR)

Pizza massively outperformed Amazon and Google

May 11, 2018

If you had to choose one stock through the decade, would you have bought the cutting-edge tech titans or a company that delivers greasy pizzas?


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?

Your gut should be used to pick the food you eat; not the stocks you buy.  A humble pizza company has generated more than twice the returns of most high-flying tech companies since 2010. What are the chances you would have picked a low tech commoditised pizza company in the past decade? Probably slim to none.

Trying to identify the next Domino’s or a group of future winners is a guessing game. By trying to outguess the market and pick a concentrated number of ‘winning’ stocks, you’re in fact significantly increasing the likelihood of missing out on the top performers. The fact is that the bulk of the returns of any index is concentrated in just a handful of stocks that generate a disproportionate amount of overall market gains. This is what is known as positive skew in the distribution of returns in the market. It is one of the major headwinds to stock-picking. So many active fund managers fail to beat the benchmark because of a simple reason - the absolute number of stocks that beat the benchmark is few and most stocks perform far below the average. This is before the costs involved in stock-picking or high fees you pay active managers for their services.

Diversification improve the odds of holding the best performers. In a study done by Dimensional Fund Advisors, a portfolio of all global stocks returned 7.3% per year from 1994 to 2016, . But if you missed out on the best performing 10% of stocks, the return declines to 2.9%. If you missed out on the best performing 25%, the return drops to -5.2%.

Source: Divest Invest Guide

We’re not saying that stock picking is a worthless endeavour, but the normal investor starts at a disadvantage. Heaton, Polson and Witte published a paper explaining the math behind why active management is challenging. They distilled their argument into this illustration:

You have five poker chips, four worth $10 and one worth $100. 
If you pull one chip out, the average expected value is $28 
If you pull two chips out, it the average value is $56. 
But most of our choices will fail to get the $100 chip and in fact ...
6 out of 10 times you’ll grab a pair with the lowest sum of $20.

This is similar to active stock-picking: most fund managers will miss the high-performing $100 stock, which consigns them to underperforming the benchmark. We can help improve the chances of capturing the market returns through diversification. (Source: The math behind futility)

We all want to be the star fund manager that discovers the next Domino’s Pizza, but even picking it once does not guarantee that you can replicate your success. Holding a diversified portfolio will ensure that you are well positioned to capture returns wherever they occur in the market. You can have your pizza and eat it too.



China's got Jack Ma's finance giant in its crosshairs (Bloomberg)

Let's destroy Bitcoin (MIT Technology Review)

How Amazon’s fashion business continues to evolve (Slate)

Shanghai to LA in 6 hours: Online travel giant Ctrip bets China travellers are in a hurry (SCMP)


Who runs mutual funds? Very few women (NY Times)

Economists focus too little on what people really care about (The Economist)

Why Elon Musk and Warren Buffett are trolling each other over candy (Fortune)


Historic Trump-Kim summit set for Singapore (Channel News Asia)

CapitaLand joins booming Chinese co-working office segment (SCMP)


The $100bn bet: How Masayoshi Son is shaking up Silicon Valley (The Economist)


Tim Ferriss: How can we become comfortable with discomfort? (WNYC // 12 mins)

Good To Know

Tech envisions the ultimate start-up: An entire city (NY Times)

The gambler who cracked the horse-racing code (Bloomberg)

Fake it till you make it: meet the wolves of Instagram (The Guardian)

How health care changes when algorithms start making diagnoses (Harvard Business Review)

Best supporting actress: Can Meghan Markle modernise the monarchy? (The Economist)

How the chicken nugget became the true symbol of our era (The Guardian)

You can make your Google assistant sound like John Legend (Slate)

Less is more. Why In-N-Out works

May 4, 2018

I recently tried to shop on Lazada. I typed ‘cushion’ into the search box, and it returned 963,138 items.  Did I want the nautical stripes, flamingo..

-me, making easy decisions


I recently tried to shop on Lazada. I typed ‘cushion’ into the search box, and it returned 963,138 items. Did I want the nautical stripes, flamingo print or geometric shapes? I gave up after scrolling to page 3. All these choices and all these decisions - and all I wanted to do was buy one cushion.

Turns out, I’m not alone. More options do not always equal better choices and can often lead to inaction. There was a study done by Columbia Professor Sheena Iyengar on the effects of increasing the amount of choices for consumers. She set up a table displaying gourmet jam, and changed it periodically to either 6 varieties or 24 varieties. There were more customers intrigued by the larger selection, but when the time came for people to actually open their wallets, those who saw the smaller display were 10x more likely to buy jam.

Professor Iyengar found that the same phenomenon applied to investing in retirement plans. She discovered that when a US retirement 401(k) plan offered only 2 investment options, 75% of employees participated. But when 59 investment options were available, the participation rate dropped to 61%. Interestingly, for every additional 10 investment options available, the average 401(k) participant’s equity allocation fell by 3.28%. (Source: Business Insider)

Investing today comes with many choices. There are over 4000 ETFs and 8000 mutual funds globally, and that’s just a start. When you add in all the share classes, there are over 25,000 fund options. Logically it seems that we are better off being able to choose from thousands of funds - or cushion covers.

What we need is fewer, better investment options. Offering model portfolios and taking asset allocation decisions out of the hands of retirement plan participants has proven to be beneficial. In a study done by John Hancock Retirement Plan Services, they found that those who invested in a single asset allocation portfolio earned better returns on average than participants who picked individual investment options to build their own portfolios— by an average of 1.06% annually over 15 years. That is a 43% difference on a portfolio earning an annualized return of 7% vs. 8.06% for 15 years. (Source: Investment News)

This is the paradox of choice: The confusion and complexity that accompany extensive choices may actually hinder your investment portfolio. Fund supermarkets may argue that offering more products can help you build diversified, optimal portfolios. But when you have too many funds in your portfolio, it may start looking like an expensive index fund. Choosing from fewer funds doesn’t need to be limiting; we believe that you can create globally diversified, optimal portfolios through just a handful of well-picked products. Having curated investment options is a better solution - as long as they are provided by someone whose interests are truly aligned with yours.



Impress the algorithm. Get $250,000 (Bloomberg)

Goldman wants to trade bitcoins (NY Times)

Tesla doesn’t burn fuel, it burns cash (Bloomberg)


It's time to ditch our obsession with trade deficits. Here's why (World Economic Forum)

Is stock market volatility good for the art market? (Bloomberg)

Investors see largest ever decline in fund fees (Morningstar)


'Prostitute mansion': Is Singapore heading for Hong Kong style housing? (SCMP)

It's talent, not ideas, that turns on new incubators in Singapore (Business Times)

Singapore airport may use facial recognition systems to find late passengers (Reuters)


Financial inclusion is making great strides: Nearly a quarter of world’s population remains unbanked (The Economist)


The paradox of choice (TED // 19 mins)

Good To Know

Over 400 startups are trying to become the next Warby Parker: Inside the wild race to overthrow every consumer category (Inc)

Inside the mind of David Rockefeller, titan of art collecting (Artsy)

Artificial intelligence is cracking open the Vatican's secret archives (The Atlantic)

The complete timeline of Marvel cinematic universe movies, from ‘Iron Man’ to ‘Infinity War’ (The Wrap)

Inside Jeff Bezos’s DC life (Washingtonian)

The average guy who spent 6,003 hours trying to be a professional golfer (The Atlantic)

Facebook is taking on Tinder (The Verge)

Source: World Economic Forum

Warren Buffett invests like a woman

April 20, 2018

Buffett, the sage of Omaha, has a decidedly feminine investment style. Yes - you read that correctly. And why wouldn’t he? Hedge funds run by women...

“The stock market is a device for transferring money from the impatient to the patient…”
-Warren Buffett


Buffett, the sage of Omaha, has a decidedly feminine investment style. Yes - you read that correctly. And why wouldn’t he? Hedge funds run by women have outperformed the industry average by over 20% over the last decade.

Fidelity Investments analyzed the investor behavior of 8 million retail customers and concluded that women make better investors than men. On average, women performed better than men by 0.40% p.a. That may seem like a small difference, but it can make a significant difference in growing wealth over time, especially combined with the fact that women have a higher savings rate as well.

What are the traits that make women better investors? Women take a longer-term approach to investing, and tend to think more holistically in terms of financial planning, focusing on goal-based investing rather than just performance. As Buffett says, his “favourite holding period is forever.” Women in general are more patient and less susceptible to the behavioural mistakes that ruin investment returns - such as overconfidence.  According to Fidelity, men are 35% more likely to put on trades, which means that the brokerage fees will eat away at more of their returns. Vanguard found that during the financial crisis of 2008, men were much more likely to panic and sell their shares at market lows, which meant big losses and missing the start of the market rally post crisis.

The key to wealth creation is staying the course and minimizing costs - and it turns out these are behaviour traits more commonly found in the female form.



The Aramco accounts: Inside the world’s most profitable company (Bloomberg)

Goldman Sachs asks in biotech research report: 'Is curing patients a sustainable business model?' (CNBC)

The 25 highest-earning hedge fund managers and traders (Forbes)


Tweeting the dollar down (The Economist)

Chinese entrepreneur wants to bet his cryptocurrency index will outperform Warren Buffett over next 10 years (CNBC)


Singapore’s prime minister: Nobody wants a trade war (Washington Post)

Google Home can understand Singaporean English, but does it know Singlish? (Business Insider)


A wife less ordinary: How to snag a Chinese husband (The Economist)


Are 'rocket billionaires' the new NASA? (WYNC // 7 mins)

Good To Know

Instagram looks like Facebook’s best hope (Bloomberg)

Style is an algorithm: Do these pants make me look like everyone else? Be honest, Alexa. (Racked)

Is it too late to stop the rise of Marijuana, Inc.? (The Atlantic)

A robot does the impossible: Assembling an Ikea chair without having a meltdown (Wired)

Six Chinese who survived Titanic disaster finally have their story told (SCMP)

What Bitcoin is really worth may no longer be such a mystery: It’s somewhere between $20 and $800,000 (Bloomberg)

Beware of selling yoga pants on Facebook (The Atlantic)

The price is right

April 6, 2018

We are clearly irrational beings. So can markets be efficient if the players are irrational?

“The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable.”

- Warren Buffett


Let’s play a game. I will sell you a $20 bill for what you’re willing to pay for it.  It’s free money - you can bid $1. The catch is, if someone outbids you, you still have to pay for your final bid.  A bidding war starts as the bids climb, and you realise you could end up paying a lot of money for nothing in return. Eventually the sassy girl in glasses bids $21 for the $20 bill, because she thinks she will 'win' by losing only $1 while you are out $20. That’s when the game really blows up - it becomes a fight to see who can lose the least, rather than win the most. A Wharton professor said a military officer once paid close to $500 for a $20 bill. (Source: Motley Fool) We are clearly irrational beings. Can markets be efficient if the players are irrational?

Professor Eugene Fama believes that price is the best approximation of intrinsic value, and won a Nobel Prize for his work on his Efficient Market Hypothesis. Markets assimilate all known information about a stock/bond/diamond, constantly. If people consistently pay for assets at prices greater than they’re worth, they’ll lose money. If those people keep losing money, they will exit the market. Only people willing to pay the ‘right’ price at least some of the time will remain. 

Let’s look at today. Recent gyrations in the prices of tech stocks, and Bitcoin’s drop of over 60% since December, have made it hard to argue that markets are rational.

Perhaps markets can be both irrational and efficient? Professor Fama states that prices reflect all available information of a security, but this does not imply that people are rational, or prices are always right. Since we are irrational, we will still create markets with bubbles and busts, marked by our greed and fear.

Just think about Amazon stock over the last two weeks - it has lost ~6.4% or ~$45 billion in value despite little to no change in its business model, number of customers, or profits. Markets can absolutely be irrational.

Although short-term mispricings can and do occur, they do not happen in predictable patterns that can lead to consistent outperformance. In the long-term, markets do get the price right. Market efficiency implies that it is very difficult to beat the market, and this has proven to be true. Market prices represent the decisions of millions of investors - this is inherently more consistently accurate than the efforts of any of us single humans.



Black Panther's Wakanda-nomics (The Economist)

Wall Street’s big banks are waging an all-out technological arms race (Bloomberg)

Spotify shows the way to a content economy (Forbes)


Trump bump Is becoming the Trump slump (NY Times)

Meet Asia's biggest hedge fund - it also makes iPhones (Bloomberg)

Rational markets theory keeps running into irrational humans (Bloomberg)


Why Singapore’s central bank has no key rate (Bloomberg)

Singapore issues first fines to Airbnb hosts for violating rental laws (TechCrunch)


"There will be no friendship between Trump and Putin": The tortured, terrifying, end of a scary bromance (Vanity Fair)

What does it mean to die? (The New Yorker)


Everything you always wanted to know about money - but were afraid to ask (Freakonomics // 44 mins)

Good To Know

Why Elon Musk doesn't care about college degrees (Inc)

‘The business of war’: Google employees protest work for the Pentagon (NY Times)

Mobike turned crazy idea into $3 billion startup in three years (Bloomberg)

At Uber, a new CEO shifts gears (The New Yorker)

Mark Zuckerberg on Facebook’s hardest year, and what comes next (Vox)

The billion dollar hacking group behind a string of big breaches (Wired)

What makes entrepreneurs burn out (Harvard Business Review)

These are the world’s cheapest places for drugs, booze and cigarettes (Bloomberg)

It’s a big world out there

March 9, 2018

Love is apparently not blind - it’s been scientifically proven that we do have a type when it comes to relationships. We make similar choices when it comes to investing, and we’re inclined to exhibit familiarity bias. There is a lot of focus on the US market which isn’t surprising given its breadth and depth. Why would you to take a chance on the slightly scruffy, unshaven nerd in the corner over the blonde, sculpted, All-American football player asking you out?

“I’m just going to put all my money in an S&P 500 ETF.”

- he said proudly.


Love is apparently not blind - it’s been scientifically proven that we do have a type when it comes to relationships. We make similar choices when it comes to investing, and we’re inclined to exhibit familiarity bias. There is a lot of focus on the US market which isn’t surprising given its breadth and depth. Why would you to take a chance on the slightly scruffy, unshaven nerd in the corner over the blonde, sculpted, All-American football player asking you out?

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.

Data source: Morningstar

They are called emerging markets for a reason. Don’t underestimate them.

Some may say, “well, those returns are really volatile.”

Yes - they are more volatile, but have a look at the best and worst annualised returns of the two indices over 1 year, 5 year, and 10 year periods:

Data source: Morningstar

We often underestimate the benefits of global diversification without assessing the facts. Guess the top performing market since 1990? You may be surprised to learn that in real terms, it’s South Africa, followed by Australia, then the US (Credit Suisse). The best-performing equity markets over the last 118 years have tended to be resource-rich or New World countries, although this trend is unlikely to continue. Focusing mainly on the US may not give you the optimal risk-adjusted returns. And as the cliche goes, there are other fish in the pond.



Harvard blew $1 billion in bet on tomatoes, sugar, and eucalyptus (Bloomberg)

China’s sharing economy is minting multibillion-dollar tech unicorns (SCMP)

The rise and fall of Anbang (Economist)


Who could lose money in 2017? These hedge funds found a way (Institutional Investor)

Temasek's love Is easy (Bloomberg)


SoftBank's got a ticket to ride. Uber's stranded (Bloomberg)

Singapore's million-dollar investments will drive AI growth In Southeast Asia (Forbes)


Loneliness is the leprosy of the 21st century (Economist)

Can wine transform China's countryside? (The New Yorker)


The three-body portfolio with Dr. Ben Hunt – Invest like the best (Investor Field Guide // 65 mins)

Good To Know

If you’re so smart, why aren’t you rich? Turns out it’s just chance (MIT Technology Review)

Porsche positions itself against Tesla, on the road and beside it (NY Times)

The grim conclusions of the largest-ever study of fake news (The Atlantic)

Google employees 'outraged' their tech is being used to build better killing machines (Vanity Fair)

Silicon Valley is over, says Silicon Valley (NY Times)

The nine types of startups Y Combinator thinks the world needs in 2018 (Quartz)

A week inside WeLive, the utopian apartment complex that wants to disrupt city living (GQ)

Mapping Amazon's growing reach

Source: PitchBook