MoneyLab

The stock market is inherently unpredictable. Even with detailed research and analysis, uncertainty cannot be eliminated. Yet, many investors still judge the quality of their decisions purely by the eventual outcome, even though that outcome could not have been known at the point of decision. Good Decisions Can Look Bad, and Bad Decisions can Look Good A poor decision (e.g., making an oversized bet on a highly speculative stock) can sometimes result in a strong payoff purely by luck. When this happens, the investor may mistakenly attribute the positive outcome to skill, reinforcing behaviour that is ultimately fragile and unsustainable. Conversely, a sound decision can produce disappointing results. Allocating capital to a broad, low-cost global equity index is supported by decades of evidence and is a rational strategy for long-term wealth accumulation. But in the short to medium term, markets can underperform expectations. If an investor judges their decision solely by these short-te...

Singapore is a leading financial centre in Asia-Pacific, ranking third in the 2022 Global Financial Centre Index. This puts it behind only New New York and London, and ahead of our regional rival, Hong Kong. However, despite Singapore's status as a world-class financial hub, its local stock exchange market falls far behind other leading countries in raising capital. Falling average daily trading volume One of the most significant indicators of the health of a stock market is the average daily trading volume. In Singapore, this has been a steady decline for more than a decade. For example, the Security Daily Average Volume (SDAV) of the SG stock market fell from 1.6 billion shares (or $1.3 billion) to 1.1 billion shares (or $0.9 billion) in 2022. The lack of market participation and the resulting reduced liquidity and lower market efficiency can lead to a downward spiral of depressed prices and further reduced trading activity. Falling number of listed companies over the yea...

"Is your house an asset or a liability?" is a question that can spark endless debate. Some argue that the answer depends on the situation and perspective, while others firmly believe that the definition is not subjective and wonder why there is room for debate. To properly address the question, we first need to know the difference between an asset and a liability. What is an asset?   According to Investopedia, an asset "is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit." Asset can be in the form of physical property such as a piece of land, inventory or equipment, and they typically depreciate over time due to wear and tear or expiration of legal rights. It can also be intangible such as patent, trademark, brand name, etc. Another class of asset is financial asset, which include stocks, bonds and cash. What is a liability? Liability is "something a person o...