MoneyLab

The stock market is unpredictable. No matter how much research you have done, there is always an element of uncertainty involved. Despite this, it is a common tendency for people to evaluate the success of their investment decisions based on outcome of the stock market, even though it is impossible to accurately predict these outcomes at the time of decision making. A bad decision can lead to a good outcome, and vice versa A bad investment decision, such as placing a large bet on a highly risky asset, may result in a good outcome (e.g. scoring a multi-bagger) by sheer luck. However, the investor may overestimate their influence on outcome which may in turn encourage him/her to continue making risky bets. Conversely, a sound investment decision can result in unfavourable outcome. For instance, the decision to invest in a (basket of) low cost broad market index fund/ETF could be a prudent move for long-term wealth growth. However, in the short to middle term, the market return could fal...

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...