Herman Ye

Investing comes with a lot of noise. Changing trends, politics, forecasts, the list goes on. Countless factors influence the stock market. Moving it up and down, sometimes aggressively in a matter of moments. A sudden decline is a scary prospect, leaving new investors hesitant to dive in. Nobody wants to invest $1,000  only to have it be worth  $900 by day's end. Unfortunately, the ups and downs are part of the game. The good news is that the ups are a lot more persistent than the downs. Taking a look at S&P 500 returns from 1926-2015, you can see that as more time passes, the greater the odds are for a positive return. Probability Time Horizon Positive Negative Daily 54% 46% Quarterly 68% 32% Annually 74% 26% 5 Years 86% 14% 10 Years 94% 6% 20 Years 100% 0% Source: Bates, L. (2018) Beat the Bank: The Canadian Guide to Simply Successful Investing Toronto, ON: Audey Press. If you're investing for a day, you're pretty much gambling. It'...

When car shopping, you're face the financial decision of buying or leasing . Buying is the more straightforward option, you exchange money to own a vehicle, simple enough. If the car is cheap, you can buy it outright. If it's pricer, you can finance it with an auto loan. In either case, the transaction is fairly clean and you end up being the proud owner. Leasing is a bit more complicated. When you lease, you're essentially renting a car for a fixed period of time. Leases typically last 2-4 years and during the period, you pay for the amount the car depreciates (plus interest). Since you're only paying for the amount you use, the monthly payments tend to be much cheaper than it would be for an auto loan. The lower monthly payments is enticing but there's a catch. When a lease is over, you don't own anything. You're simply given the option to buy or return the car to lease another, restarting the process. Leasing is cheaper in the short term but wil...

Investing for most people is buying stocks that they think will rise in value. If you're a fan of Apple, you buy shares in hopes of getting a piece of their expected future growth. In fancy terms, when you're optimistic about a company, you're "long" or "bullish". When you're pessimistic about a company, you're "short" or "bearish". When investors are bearish, they can profit through a strategy known as short selling . How Short Selling Works There are 3 steps to short selling: 1) Borrow the shares you want to short from someone who owns the stock. This is usually an institutional investor such as a big bank. No free lunch here, you'll be charged fees for this loan. 2) Sell the borrowed shares. Pocketing the money from the sale. 3) Buy back the shares and return to lender.   The goal is to buy back at a lower price than you sold for, profiting from the spread. When the shares are returned, you're "c...

In 1951, psychologist Solomon Asch conducted a series of studies to test the impact social pressure has on our decision making. The study involved presenting groups with two cards. Card 1 had a single line, Card 2 had three. The group was asked to choose the line on Card 2 that matched the line on Card 1. Simple enough, but there has to be a twist, right? Yup! Would be a pretty boring study otherwise. Each group was filled with actors, with only one true test subject. The experiment would begin with a few rounds where everyone would answer correctly. The answer was always obvious. As the test progressed, the actors would start choosing an incorrect option. For example, with lines above, the actors would choose A when the answer was clearly C. Asch found that social pressure would cause test subjects to conform and select an answer that was obviously wrong. The likelihood to conform being greater the larger the number of actors. There's been a number of studies...