STE's Stocks Investing Journey

Everyone Loves a Bubble – Until It Bursts Investors love bubbles. Kids love bubbles too. The sight of prices soaring day after day brings excitement, euphoria, and a false sense of wealth. Everyone feels richer when stock prices are rising. Financial media celebrates new highs, analysts start upgrading targets, and even your barber , taxi drivers starts giving stock tips. But just like the soap bubbles that shimmer beautifully before they burst, financial bubbles too are fragile illusions. They expand rapidly on the back of greed and easy money , but once pricked, they collapse with breathtaking speed, leaving destruction in their wake. On the other hand, recessions , though painful, are part of the natural rhythm of the economy. They cleanse excesses, reset valuations , and sow the seeds for the next recovery. Understanding this difference is crucial for every long-term investor who wants to protect and grow wealth steadily. < Ai Image> The Seduction of a Bubble: When Euphoria ...

Hi everyone, this is STE here and welcome back to my investing journey. In this post, I’d like to talk about two popular ideas that often sound smart but can quietly mislead investors: Opportunity Cost and Yield on Cost. Both concepts have value in theory, but in practice, they can distort how we view our investments , anchoring us to the past instead of focusing on the future. Let’s unpack these two concepts and see why looking backward can hurt long-term performance more than help. The Rear-View Mirror Problem in Investing Many investors love to use “ opportunity cost” and “yield on cost ” as proof of how well or poorly they’ve done. They look at the past , the missed winners, or the dividends growing from an old purchase and feel either regret or pride. But investing is not a museum of memories; it’s a living, evolving process. The market constantly changes, businesses evolve, and capital must keep flowing to where the future returns are highest. The biggest danger comes when we le...

Today, I’d like to take a deep dive into the fascinating world of global finance and explore how global liquidity has reshaped the stock market since the Global Financial Crisis (GFC). Over the past decade and a half, central banks around the world have been pumping money into the financial system, almost as if cash could grow on trees.  This wave of liquidity has changed the way markets move, fueling long bull runs and altering the nature of bear markets. In this post, we’ll unpack what this “ flood of money” really means, how it has transformed investor behavior, and why understanding liquidity has become essential to making sense of today’s financial landscape and what does that mean for bear markets, investor confidence, and the long game? Liquidity: The Market’s Lifeblood Let’s start with the basics. When we talk about liquidity in the context of global markets, we’re talking about the cash (or near-cash) that central banks like the US Federal Reserve (FED), European Central...

 Hi, everyone ! It’s me again, back with another deep dive into the fascinating world of stock markets and investing. Today, we’re exploring a concept that’s like the heartbeat of the stock market : regression to the mean . Think of it as the market’s way of finding balance, much like the ebb and flow of tides along seashores or the predictable shift of seasons. Markets go up, they go down, they swing wildly at times, but over the long haul, they tend to settle back to a baseline (or so-called regression to the mean) . Let’s unpack this idea, explore its historical roots, and determine how we can apply it to make more informed investment decisions. What Is Mean Reversion, and How Do Investors Use It?   <source:Investopedia.com>   How Applying Regression To The Mean Can Improve Investment Performance   <source:Forbes.com> The Cyclical Nature of Markets   Markets, like so many things in life, move in cycles. Picture the economy, credit flows, o...