Scenario: for years you have invested in some beloved _good_[1] asset classes. Now you hear some friends getting better Returns. Initially you didn’t get affected, but the more you dwell on those return numbers, the less satisfied you feel about your beloved old friends.
- Analog 2: reliable beloved old bike vs a newer, fancier vehicles.
- Analog 3: a venerable alma mater with a focus on quality and graduate employment vs a rising-star college with a growing reputation, like Nanjing, or NTU
- .. Well, in the (competitive) landscape of tertiary education, reputation is built over decades.
- Analog 1: Applied to sexual relationships, we would say 喜新厌旧. The greying, 任劳任怨, trustworthy, dependable, predictable spouse is THE long-term partner. Note some of the adjectives apply to asset classes too.
If this tendency becomes a problem, then it is good to keep a cool head 冷静 [critical thinking] about the asset classes. Whatever high return is usually unsustainable and become inferior to our beloved old friends over the long horizon. The high return is sometimes less legitimate and provides a breeding ground for gambling.
[1] Good generally means reliable [legitimate], and suitable for your financial needs. What becomes beloved depends on your nationality [availability], your personal experience and risk appetite. It can be bonds, Reit, local rEstate. My own top 5 (unranked) would include
- cpf-SA
- integrated shield plans + MyCarePlus .. high leverage
- U.S. stocks
- HDB + SEAsia rental rEstate
- USD and SGD cash
- — some also-rans:
- bond mufu .. acceptable for parking
- eq mufu .. good for ex-US
- China rEstate .. poor NRY
- gold, U.S. rEstate .. not bought yet
— eg of hot /enhanced/ returns:
Some use high leverage. Some follow Reddit and invest in non-blue chip tech stocks like electric vehicles or blockchain tech.
I guess those assets are less secure than buying real assets on margin, such as gold, oil or rEstate.
I don’t use margin or leverage at all.
In the bccy domain, getting_in_early (FOMO being another side of the coin) is a key reason for some of the enhanced returns. But the risk of pump-n-dump is very real.