Friday, 21 November 2014

How to lose everything after winning the prize of your life

It seems quite fascinating that such a reversal of fortune is not only possible but also quite common. Many dream of winning the lottery or getting another windfall that would sort them out for good. And the sum does not even have to be that huge.
However, what happens in practice is more often tragic. Here are some of those stories.

80% of Statistical Analysis is wrong

Thursday, 20 November 2014

Valuation Sources

To check valuations of world markets, here are some useful resources:


Rolesia - A macroeconomic simulation

If you want to be your own central banker, try this.

Rolesia - Virtual Economy Simulation 2014

Rolesia is a free, fun and strategic economy web simulation for all who enjoy strategy simulations, and for all wishing to discover and understand the policy tools on offer to Governments and Central Banks around the world. The purpose of the software is to help the world-wide population understand the complexity of the world economy, and also to understand the power behind governments’ fiscal and the central banks’ economic monetary policies. Helping to improve the world population’s knowledge is a small contribution towards empowering the people of this planet and strengthening democracy. The simulation can be perceived as an economy game based on a virtual economy.

Wednesday, 19 November 2014

Can Money Buy You Happiness?

Can Money Buy Happiness? Here’s What Science Has to Say - WSJ

Can Money Buy You Happiness? It’s True to Some Extent. But Chances Are You’re not Getting the Most Bang for Your Buck.

Basic Investment Principles

Here is a list of very basic principles as prerequisite to investing. This is a concise list. Each line deserves a chapter, if not a book, on its own.

  • Pay yourself first. Establish a habit to save regularly. 
  • Start early. Benefit from the magic of compounding interest. 
  • Keep costs low. Costs eat a huge portion of returns over time. 
  • Use value-averaging, or dollar-cost averaging. Invest regularly the same amounts at equal intervals. Because of markets' reversion to the mean this leads to dollar-cost-averaging of the asset price.
  • Stick to index funds ("what you understand") as the core. Active funds are expensive and, in general, return less. Specialist funds or individual securities can be used as satellites. This is known as "core-satellite" strategy.
  • Keep cash portion in liquid bonds for better returns. 
  • Stick to your asset allocation.
  • Pay attention to the total return (income + growth). Income funds yield more but usually have lower total return. Tax effects of income - income is taxed immediately but tax on growth is delayed (taxed only if sold).
  • Long-term price earnings (P/E) ratio is 14. Starting valuations matter.
  • Asset allocation, the risk balance, is the main determinant of return. Bonds proportional to age (?). 

The principles above come from various texts and personal experience. They should be refined over time.

Starting point valuations

A good article on valuations and starting point for investments by Shane Oliver.

Starting point valuations matter, a lot | AMP Capital

Energy costs

These charts explain a lot:

Cost of electricity by source - Wikipedia, the free encyclopedia