Herman Ye

  Would it be a smart to take all my money and bet on a hot IPO? Probably not. Too many eggs, too few baskets. I'll likely lose it all and look like a fool. What if the stock skyrockets 300%? Now all of a sudden I'm a genius and people are asking me for advice. If things don't work out - bad decision, if they do - great decision. But it was the same decision!  Judging the quality of a decision based on the outcome is known as outcome bias .  When making a decision we can only predict the likelihood of possible outcomes . The outcome itself is always unknowable so we can't judge a decision based on it. A good decision is one that is most likely to achieve a desired outcome. No guarantees, bad outcomes can still happen. No matter how much analysis you do, there will always be a degree of luck/risk.  To improve your health, exercise is a good idea. You could also seriously hurt yourself - a risk you can manage with proper training but a risk nonetheless. This doe...

Bitcoin's a fascinating story. So much has happened in its short existence. Price explosions (and crashes), debates about the future of money, the emergence of an infinite universe of cryptocurrencies and crypto-related businesses. Despite Bitcoin's impact, I still have a hard time getting the point of it.  Born in 2009, Bitcoin was a response to the Great Financial Crisis. Massive bailouts raised a lot of concerns about the stability of money. Backed by code and free from human messiness, it was supposed to be the new standard - decentralized and incorruptible. Unfortunately, it hasn't played out this way.  Adoption's been weak. There's no incentive for businesses to accept it or for consumers to use it. Good ol' cash is easy, so why bother?  Bitcoin is volatile. It's extremely inflationary and deflationary, able to move violently in either direction in moments. Money needs to be stable, no one can make rational spending decisions otherwise.  Plus, it's...

Scroll through your newsfeed and 9 out of 10 stories will tell you the world is ending. Negativity has a monopoly on headlines. Pessimism sells. It captures your interest and your clicks.

My investment strategy is simple, I buy few index ETFs and hold them forever. Happy with market returns, I forgo any attempts at outperformance. I've written a fair amount about my liking for a low-effort, low-fee, passive strategy. Despite this, I am not at all against active investing.  You can be very successful picking the right investments. I know those who've made a lot doing so. I also know those who've lost a lot. These groups are not mutually exclusive.  Active investing is hard, and it very well should be. If everyone could do it, all profits would vanish. Only a few outliners will ever do well. This applies across all fields. Only a few players will make it to the NBA, even fewer will win a ring. Only a few authors will get a publishing deal, even fewer will make the best-sellers list. It takes a lot of effort ( plus some luck ) to become elite. If you're able to rise above, tremendous fortunes await.  With great rewards come great risk. The risk of wasted ef...