Ethics and the Stock Market

Everybody wants to do the right thing. At least on paper. Of course, it sounds so much better to say “I contribute to saving the world” instead of “I contribute to spreading cancer”. Right? With this idea in mind, there is a large movement among banks and financial institutions who like to put some ethics on their website as a leading principle, and thus to promote “green” investments, “sustainable” companies and socially engaged institutions and individuals.

However, more than often, this is nothing but a farce, a concept lost in translation somewhere between blurry definitions, bureaucratic approach, lack of real oversight and purely financial motives.

You don’t support any company when you trade its shares

Let’s make this clear from the beginning. You don’t really support any company when you but its shares – unless it happens during the actual public offering, the IPO. The IPO is the only real point in time when you can show whether you support a company or not, by purchasing its first shares (and thus giving your money directly to the company) or letting the opportunity pass, thus keeping your money for yourself.

After the IPO, all publicly traded shares are being traded among the investors. The company itself doesn’t see a penny from the shares after that. Unless, of course, it’s trading its own shares as well.

This doesn’t mean that there is no indirect support. A higher stock price might make it easier for the company to get loans or to convince new business partners to work with them. But this is something you have very little influence on. But saying that, let’s say, you would support tobacco companies because you bought some shares of a tobacco company is, in my opinion, pure bogus.

You get voting rights and the opportunity to express your opinion

On the other hand, once you purchase some shares and the annual general meeting of the company shareholders takes place, you will get a proportional vote on certain company policies and decisions. So if you think that the company you invested in has a generally solid business model but you would like to express your idea of having some things being done a little differently, you get a say.

From where I stand it’s like democracy. You can abstain and not vote, thus undermining the democratic process. Or you can join in and get a say. Of course, if you are just one in a million (or billion) it won’t count for much. But if there are others who share your concerns, then at least you get a shot to support changing things for the better.

Do your own research, don’t rely on analysts

I am seeing this over and over again. Companies are receiving countless awards for their sustainable practices, their carbon footprint, their ethics… whatever. But forget the awards, forget the analysts who praise whoever is paying them. Do your own research.

Sustainability and ethics are such broad terms, and there are really not many companies that truly get what it means. So I prefer to just take a look at the basics and I usually start my research within a company itself. How are the employees being treated?

Ethics and sustainability go hand in hand with taking care of company stakeholders, and no other stakeholder is more important than a corporation’s own teams. Are they paid sufficiently so they can live on their wage and support their families? Do they get health-care plans, provident funds, and a healthy work-life balance?

The easiest way to do such checks? Talking to people who work there, or reading what they say. Less than 20 minutes of online research will quickly reveal whether a company is what it promises or not and whether you will get what you expect.

The stock market is about profits

Reality is that business, in all forms, is about profits. Like it or not, a company and its share price won’t grow if their business doesn’t make money. So the only true support or rejection of a business comes from the consumers. Not from people trading shares.

And some people who don’t understand this principle might see it as some kind of evil plot, but it really is not. True, most investors have very little morals, but also very little loyalty. They will always support a successful business. If a company is bad and does bad things, people should make conscious decisions on whether they support and buy these company’s products or not. If a clear trend emerges that will show rising profits and rising market demand for a “good” company, then investors will follow this trend. So it really is about who is doing the better job.

Unfortunately, in reality, many people still don’t care enough. How else would one explain that some of the largest companies in the world can do the worst things to humanity and yet being still massively supported by its consumer base? I am specifically referring to a popular e-commerce giant who is almost daily in the press for neverending revelations about abusing and underpaying its employees, and a social media giant who is actively contributing to misleading, if not to brainwash people into mindless puppets following fake news and disinformation campaigns. And no, this has nothing to do with free speech.

Having said all that, it’s really up to you how you define your idea of supporting or not supporting a company. Trading shares has very little real impact, but personally and emotionally it can play an important role. And the financial industry knows it. So, don’t get played by them by blindly following some awards, but invest just a little time to do your research, adjust your own habits (like i.e. where you buy which products) and to support the right thing in the right way.

Stakeholders are the better shareholders

There was some amazing news coming from Wall Street a few weeks ago. 181 CEOs, members of the so-called business roundtable and representatives of some of the largest companies in the USA, declared that maximizing shareholder value is no longer the single purpose of their companies. Instead, the emphasis would shift towards stakeholders.

I believe that many people out there don’t understand the difference between a shareholder, and a stakeholder. Or they didn’t take the manifest seriously. Otherwise, I have no reasonable explanation of why this fundamental shift in corporate management attitude doesn’t receive more coverage.

Shareholders vs. Stakeholders

The definition of a shareholder is very simple: Someone who owns shares of a company.

The definition of a stakeholder, however, can be very complicated: It’s everyone who is in direct or indirect relation with a company.

This includes the shareholders. But it also includes the employees, business partners, land-owners, basically all who are affected by the companies operations. It includes the entire eco-system in which the company is active, including the environment.

With a similar mindset to the one of thinking global and acting local, a company that takes care of its stakeholders will do its best to contribute to society in every aspect that makes sense and where the company can make an impact within the scope of its operations. Starting with its own employees, support to local governments, business partners and spreading into larger topics and areas as long as they are related to the companies business.

A holistic concept

This is a true game-changer. It acknowledges that a company, any company, carries responsibility towards society as a whole. It assumes the understanding that the companies’ employees are actually a true and real asset and require at least as much attention as its shareholders. It also acknowledges that company profits need to receive a long-term consideration that goes beyond quarterly reports.

Putting stakeholders to the front of a companies responsibilities is a holistic approach to business.

Too good to be true

I had (and still have) some serious doubts when I read the news. Especially when I noted that Jeff Bezos is a signatory of the declaration, my alarm bells went off.

The CEO of Amazon is hardly known to be a person who cares for his stakeholders. If he signs such a treaty, it automatically degrades the value of the paper it’s written on. Jeff Bezos and Amazon have gained amazing success over the years making Bezos the richest man on this planet. But his contribution to the world ends with the shopping experience.

Compared to people like Bill Gates or Warren Buffett, his priorities and philanthropic efforts seem almost non-existent. The most diplomatic word that would come to my mind would be “uninspiring”.

Same would account also for a few other CEOs and companies which have shown little effort in the past to take care of their stakeholders. Is this declaration really going to change it? Or is it just a PR stunt?

Shareholders will profit – in the long run

Time will tell, but I do believe that among many SMEs out there, the idea is nothing new. In fact, most family-run business and small enterprises which are not listed on the stock exchange had this approach on their business cards for a long time. It’s been the large corporations who moved into a questionable and unsustainable business mind – and it’s time that they get back on track.

Being an investor and shareholder myself, you might wonder why I applaud this change. True, some companies might have to review their supply chains, work procedures, payrolls. This might affect profit margins and ultimately the dividends that I collect every month.

But I rather see my dividends growing steadily over a period of 50 years than to read news about how the companies that I am invested in are contributing to environmental destruction, abuse of workers and handling its business partners unfairly, only to secure a slightly higher profit percentage.

The employees are at the heart of a company. Business partners and the environments are the tools, places and customers that ensure it stays in business. The way I see it, putting stakeholders first is definitely a smarter approach to do business and shareholders will profit from it on a much wider spectrum.

4 Reasons not to invest – Being afraid of losing everything

A majority of people out there thinks that investing is not for everyone. A recent survey by Blackrock revealed some critical reasons across generations, and as for why people would postpone or even not consider to invest at all. In my last two posts, I have covered the top 3 reasons from that list. Time to get to the last one:

  1. Access to and understanding of information about investing
  2. Having not enough money to start investing
  3. Being too worried about one’s current financial situation (and thus being too busy to worry about the future)
  4. Being afraid of losing everything

Worrying about losing it all is a very common concern that is being repeatedly mentioned among those who don’t consider investing at all. So let’s take a closer look at this valid concern.

Can you lose your investment?

The short answer is simple: Yes. Of course. It could happen.

You could also lose money if you forgot your wallet on the bus or train. Or you could waste money on a product that you actually don’t need. Or a product of inferior quality that will break once unpacked and force you to have to buy something else. You could lose money when you “borrow” it to someone. There are countless options.

But these would be all examples of let’s call them unvoluntary choices. Let’s look at other ideas that are supposed to make you money, but could end up losing it. Let’s see.

Putting money in a savings account is a viable option. Or so it was. But these days, negative interest rates and inflation do just that, make you lose money. Thinking about putting it all in a safe? There is no way how money can grow there, and again, inflation will take its toll. Want to max out your provident fund payments or social security? Sure, but it’s not that these are without risks either. In Germany, the pension payouts are now so low that many retirees need to apply for additional supplement money just to get by. Playing with the idea of getting some government bonds? Well, just look at Greece, Cyprus or Italy. Countries do get in financial trouble as well.

What I want to say and show is that there is no option without any risk out there. Risk is part of the deal. Of any deal.

What does it mean to buy and to own company shares?

When you invest in the stock market and buy shares of a company, you are basically becoming a partial owner of the business that you put your money in. One of many. It means that the business is already established and grew large. Large and confident enough, to be backed up by millions of other fellow investors. Millions of other people who rely on it for this business to generate wealth for them.

And those investors are never idle. They observe and evaluate the company and express their opinion about the value of the shares and thus ultimately of the company, by influencing the share price. Every single day.

Every time when somebody puts up a buy order to purchase some shares, someone else sees the order and examines whether he/she is willing to accept this offer. So there are always two parties involved. One, that wants to sell. One, that wants to buy. And everyone has his/her reason to do so.

Opinions matter

This already clearly indicates that where you might see an opportunity for a great future, someone else sees it the other way round. This also means that where you think that you can make some money, someone else thinks that this ship has already sailed. Or that the value is already fair and has no more upward potential. Or that someone is already happy with the development and needs the funds to invest in something else. Or that someone just needs the money.

You will never know the full and real reason why someone else wants to sell a stock, but you should be aware of this system. Because it also implies that there is a risk. BUT, as Warren Buffett likes to say: Risk comes from not knowing you are doing. The more you know about the company you plan to invest in, the more you can leverage your risk. Or, if you don’t have the time and patience to dive into it, you can just leave it to others.

Reducing risk through diversification and a passive investment

Warren Buffett recommends potential investors a very specific type of investment: Low-cost passive index funds. Also known as ETFs. What makes ETFs a great investment? They reduce the risk by splitting your invested money across all companies in the index that the ETF is being applied to. So if you put 100 Euros in an ETF that is following the German DAX index (which includes the 30 largest companies in Germany), it means that each of these 30 companies listed in that index will become partially yours. In tiny amounts, but yours.

Diversification through ETFs makes sense for small investors because it is hard to achieve if you invest only small amounts of money. For example, one share of the German sports giant “Adidas” costs as of today 259,65 Euro. Just one share. So if you have only 100 Euros a month to start investing, how could you buy even only this one share? There is not much of a chance to start diversifying either.

ETFs work here the same as other funds, by collecting the money from other fellow investors and putting it to work in a nice bundled package. This way they can buy all the shares that are part of the index, and let you participate in it on a partial basis. This is just one of many ways, techniques, and strategies to manage your risk.

The financial system is built for this

As an investor, you put your money to work in a business. Our world is built on that. Our countries depend on that. Our jobs depend on that. Our financial system couldn’t function without this. So unless the whole financial world collapses, there will always be some business opportunities to invest in. As a passive investor, all you do is to put your faith into the system of how the business world works.

And yes, it might collapse someday. But guess what? If our system would collapse, then it wouldn’t even matter where you put your money in. It would be gone anyway. So you have a choice here: Trust in the system and get the chance to participate in all the opportunities that it has to offer, or don’t and forfeit all your chances right from the start. If you see it this way, the decision of whether or not to invest should be a no-brainer.

If you still have some restrictions, it might be not a bad idea to get someone to help you. The internet is very resourceful, but a financial advisor could also make sense. If you are reading this blog, it means that you have already made some steps in the right direction: to educate yourself. Don’t stop there. Keep reading. Keep learning. And start investing.

Everyone is a nobody to somebody

I don’t really remember where I read this quote, but it’s so accurate and so much matching my way of thinking, that I really felt like needing to write about it. Everyone is a nobody to somebody. Why do I consider this important for this blog?

The truth is that nobody cares about who you are…

The rise of social media is, in my opinion, a strong sign that people really feel… well, the right word may be “insignificant”. They might be not fully aware of this, but deep down most of us must know how unimportant we actually are as an individual person. And we are trying to compensate this through social media.

By connecting with thousands of people and bombarding them daily with posts and pictures of what we do, what we eat, where we go and how amazing our lives are, we are desperately trying to stand out from the crowd with the hope that actually anybody cares.

Every “like” we receive is a confirmation of the expected recognition, every comment makes us happy… but in fact, since everybody does that, it’s really meaningless. As long as you are only trying to convince others that you do stand out from the crowd, nobody really cares, no matter how many likes you get.

Don’t be sad or disappointed. There over 7 billion people on this planet, why would you think that you are special? Do you actually care about anyone else from your social media network to a degree that you would actually call this person occasionally? I mean like a real call, having a chat for half an hour? I bet the list of people who would match even only this one simple requirement is really short… it is, therefore, only logical that most of your connections think exactly the same.

… unless you have something that others want

Things change however if you have something that others want or need. Usually, this comes down to only three relevant things: Money, power or influence.

Everybody wants to have more money. Money can not only make your life easy and buy you stuff, but it also can give you access to a better and longer life, even more success (you need money to create more money), a privileged style of living, or simply the convenience of not having the same worries as millions of all other people who have neither money nor power. Money creates a feeling of greed and jealousy.

Power can be generated by money or create money in the process of being executed. It can be physical, intellectual, political or even lethal. Power puts you in control of others in the most direct way possible and is therefore mostly feared but also adored.

Influence can be generated by money and/or power, or it can work out vice versa, creating money and/or power in the process of executing your influence. It’s a sneaky and smart approach that is often being despised in its ways but adored in its results.

If you will be identified as a person with either money, power or influence, your life may change dramatically. But mark my words: Not necessarily for the better.

It’s good to be a nobody

Because once you have been identified, you will become something we call a “public person”. A politician, a billionaire, a movie star… you might be jealous of their glamorous lives, but if you really, reaaaaallly think about it, are you sure that you would want to be a public person?

Having money, power or influence is automatically putting a lot of responsibility on your shoulders. People want some part of it, and hold you responsible for all your achievements. If you become rich, people want to know how you became rich and you can also rest assured that they will judge you on it. Same goes for your power and influence. How you got it and how you use it, with who you share it – everything will become public and in many instances, somebody will want to have his or her cut of it. Whether it will be in the form of taxes, public pressure or even physical or mental enforcement. People will start coming after you.

That’s why when aiming for the riches, I personally would probably never reveal to anyone anything about my success. I will reduce or even completely seize my social media presence, and ensure to live a humble way of life without standing out from the crowd in a too obvious way.

From my point of view, escaping the rat race is about getting your time back for yourself. This just doesn’t happen if you become a public person. This is the reason why I intend to become a nobody once I reached the stage of calling it a day, quitting my job and start following my passions.

There is no real right or wrong here and everyone will have his or her own view on it, so I leave it to you to decide how you will prefer to handle this, once you reach your financial targets. Just make sure that you take a moment and really think about it.

Drama is all around

For anyone who was thinking that 2019 would offer some political stability and economic recovery, the year started pretty awful. Let’s take a look:

  1. Brexit – everything hints at a total disaster with the UKs decision to leave the EU. We can expect high market volatility and a lot of insecurity on how an unorganised Brexit will actually effect everyone.
    My take on this matter: The Brexit will be cancelled. I think everyone already understood, that the British government is not capable of managing something on such a huge scale. For investors, there may be some great opportunities to watch out for: Vodafone offers an all-time high dividend yield of 8,8%, GlaxoSmithKline is at 4,9%, and Royal Dutch Shell (B) is at 6,1%. It might be a good time to take a closer look and risk-oriented investors might consider building-up some first positions.
  2. Trump Impeachment – Another huge topic to look at. The investigation into a Russian collusion is proceeding very quickly and Trumps own people start turning on each other and on Trump. American news outlets don’t give us really any clear picture on what is happening. You can watch CNN or FOX discussing the same issue and you will get completely different interpretations and results depending on the channel you prefer to watch. However, in the end, something big will happen and this end might happen very soon. I am almost certain that we will see things clearing up in 2019.
    My take on this: Politics in the US are seriously messed up and Trump may survive this. If he does, the future is truly unpredictable and even more, I would then expect Trump to even win a re-election. If he doesn’t survive this drama, then we may see markets rise together with democrats regaining power. We would probably see stabilising tariffs, politicians focusing on trade and reducing international disputes and a generally speaking more positive sentiment. I would love to see that happen, but for now I remain sceptical.
  3. Chinas expansion – If you watched Mr. Xi’s New Years speech, you might actually get scared. Telling on television to his own troops to get ready for conflicts, and to emphasise his position about reserving the right to take Taiwan by any means including force is not a small thing. At the same time, we have the South China Sea boiling up, China’s investments in infrastructure and technology projects and companies across the globe, and a stronger than ever buildup of military power, intelligence and provocations with even the mightiest nations in the world.
    My take on this: China got some serious issues to tackle and apparently more and more challenges to control its economy and its population. A dangerous mix that has, historically speaking, often led governments who try everything to prevail in power to do stupid things. What worries me the most is that China seems absolutely not concerned about challenging not only the USA, but also Canada, Japan, all South East Asian nations and even Europe. All at the same time. Their tricky rhetoric and massive cash deployments across the globe are being met with more and more scepticism and might turn into a very negative sentiment by the end of this decade. I have only 1 Chinese company in my portfolio (Baozun) and will probably refrain from any further investments in the Chinese market, until it becomes more clear where this country is actually heading.
  4. European Dramas – with all the Brexit talks, the only other topic in the EU that is still coming up frequently, is Mr. Macron and his failure to find a proper communication channel to the French. The yellow-vest-movement shrank, but turned more violent and could gain new traction at any time. All this happens for one main reason: France is in trouble as its economic numbers don’t match up. But to be fair, it’s not only France. Spain, Greece, Italy… there are tons of problems to tackle and any of these countries could cause a major drama in 2019.
    My take on this: If the Brexit will be cancelled, then Europe will be just fine. On the other hand, if the UK really leaves the EU, the results will be unpredictable. We might see other countries willing to follow suit which could eventually destroy the EU as we know it. In terms of investments however, Europe is a paradise at the moment. So many great and undervalued stocks out there, that it’s hard to list them all.

I will keep it at this 4 points for this post, but there are actually so many other things and dramas to worry about, that there is only 1 conclusion that we can be truly sure off for 2019: It will be an exciting year.

Disclosure: I own all stocks mentioned in this article.

Impressions from Berlin

I am currently on vacation and visiting my family in Germany, Berlin. It’s my first visit in almost 2 years. I had to skip last year due to switching jobs and an overwhelming amount of work. Obviously, even while living abroad I am still following news and since I work in a hotel and have plenty of guests from Germany, I usually feel to be well informed about what’s going on at home.

Well, this is the first time that I felt misinformed.

The whole world is talking about the problems Germany is supposed to have, related to immigration issues, specifically to the large influx of refugees. Newspaper articles are full of terrifying stories, people are talking about rising crime rates and increasing socio-economic challenges.

Well, after spending a week here and visiting plenty of areas by day and by night, I can say that the city didn’t change in any negative manner. Just the opposite. The city seems better than ever and I might actually consider moving back here next year.

The streets are full of coffee shops, eateries and stylish bars to hang out. I hear different languages everywhere, from English, Spanish, to Polish and yes, sometimes also some German. I consider this diversity to be refreshing and positive. It fits with my personal point of view and considering myself as a world-citizen, rather than a German (I got 2 passports, so I can’t claim any nationality alone anyway).

Streets are mostly clean, schools look better than during my time here, playgrounds are full of families with children all day long. There are more designer buildings, it seems there is more technology everywhere but at the same time, the city is as green as a forest. Parks, lakes, the amount of natural elements is overwhelming everywhere. The focus on healthy food, drinks, recycling, sustainable infrastructure and the promotion of environmentally friendly actions is really refreshing and something you just hardly see in south-east Asia.

It might also be that by now I see things different, with the eye of a father more than with the eye of the adventurous world-conquerer that I once intended to become… we all had our dreams, didn’t we?

By now, Berlin got some of the glamour that major cities need which it didn’t have in the past. One reason why I left the city (and the country) so many years ago, was due to the lack of… well, excitement, diversity, and energy. I am glad that I start to like the city again. And I am glad, that most of the stories I heard turned out to be vastly exaggerated.

Today nothing about investing, but I thought I need to share this impression. The next investment article will come over the weekend. Until then, I will enjoy the city a little longer.

Markets can’t go up forever… or do they?

Just when I wanted to write this article, markets went down. What a timing! But no, this is not a crash just yet.

I believe that there is no perfect answer to the question above, but let me say this: There might be a limit to growth somewhere, but I am truly not able to spot it and most certainly not any soon. I would even go as far as to say that the only way a limit could be found, would be due to our (humanity) own intervention which would include some kind of mass annihilation or a large-scale natural catastrophe that would wipe out a large chunk of humanity, infrastructure and destroy our gathered knowledge. But even this would not limit our growth, it would rather throw us back a little.

Technology is key

You see, a limit on growth has been predicted over and over again. But whenever we get to the point that we think “this might be it”, a new technological development comes along that puts us back to square one and I believe, that right now, we are just about to be put back to square one – again.

Hyping new technologies is kind of popular. Who among us would not at least hear something about the Apple Worldwide Developer Conference, Tesla, and Space X and it’s promising for an electrified future and space exploration. Even companies like Amazon, Netflix, and Microsoft change our daily lives in ways that our parents could not imagine. But all these developments are not only creating new ideas, they also fundamentally change the expectations in our daily lives, work, and social interactions.

I am not saying that it’s all great. I am saying that it changes things.

The amount of knowledge and experience that is now being shared, almost instantly across the globe with remote access to resources all around the planet, the development in robotics, artificial intelligence, improvements in health care and data analysis are creating an enormous potential. And we are just about to tap the tip of the iceberg. We are still very far from even understanding where all this can and will lead us to.

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Just a look at this chart from Visual Capitalist (really appreciate your work!) shows where we are heading now: Ever-increasing automation, which goes hand-in-hand with the development of IoT (Internet of Things) and a dramatic change of future focus on required education, labor and career perspectives. Where will this lead us?

As long as we are going to explore, research and look for ways to improve our lives and ourselves, the economy will keep growing. And so will opportunities for investors. Understanding this basic principle is all you need to understand why you should be an investor and the sooner you start, the earlier you will be a true part of it.

Disclosure: I am invested in Apple & Microsoft.

Investing is only for the rich

One of my favorite websites and even more so the Twitter account is the site of Visual Capitalist or @VisualCap. There is always something great to discover there, like for example beer prices across borders:

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This example should have some serious impact on the next travel destination, right? These graphs are not only entertaining and educational, they also cover a huge amount of valuable information that is meticulously gathered and put into easily digestible perspective. Another recent example is this one:

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Warren Buffet is, without doubt, one of the most successful investors of our time, but he started on a very small scale. Actually as small as most of us. What he discovered early was the power of investments and of compound interests, re-investments and patience.

The common belief that investing is only something for the rich is fundamentally wrong.

Fact is, that most people don’t have sufficient financial education. Schools tend not to focus on money as a topic in detail and parents often believe that the only way to reach financial highs is to have a sky-rocketing career. For most, saving large amounts is only possible with a similarly large pay-check.

This could not be further away from the truth. In fact, having obtained my vocational education in a German bank many years back, one of the most astounding things I noticed early on was that people with large paychecks were usually the ones with the largest debt. While they had good credit scores, they often struggled on a monthly basis to cover their cost of living and paying back credit card bills.

On the other hand, the average customers of our bank who earned regular wages but were also very diligent in savings and keeping their living cost at bay, tended to have very solid 6-digit accounts by the time they were in their 40ies. For those who invested in the stock market, this happened often even much earlier on.

You got to start and you got to keep doing it.

Understanding and realizing that every saved amount matters is crucial to reach the goal of financial independence. Even a small contribution of 25 – 50 EUR a month makes a difference and one will quickly realize that saving money makes us actually much more happy than spending money.

It helps in setting goals along the way:

  1. Goal: Reach 1.000 EUR (4 digits)
  2. Goal: Reach 5.000 EUR
  3. Goal: Reach 10.000 EUR (5 digits)

Once the goal is set, you really got to stick to it. There will be setbacks and there might be rough times when one gets really tempted to spend the stacked away cash or to sell the investments made. But as I mentioned in one of my previous articles, time is your biggest asset and patience, diligence, and perseverance are key to success.

Investing is for everyone.

The sooner you realize this, the sooner you will hit your 6 or even 7 digit target.

Connecting without a connection

There are a few hot topics on the agenda that will require close monitoring over the next days and weeks. As always, president Trump ignited some fires. While it’s good news that apparently the meeting with North Korea will go ahead as per original plan, the troubles with China are less encouraging. The South China Sea dispute is heating up and it may very possibly end not well. I got to admit that I was not perfectly informed on that front, so I did some research and found this very useful map that illustrates it perfectly.

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The “nine-dash-claim” is basically what China considers their territory. Safe to say that listening to Chinese rhetoric is one thing, but a brief look at this map says it pretty much all. The nine-dash-claim is “bold” to formulate it in the most diplomatic way. I got to be honest, as a Philippino, Vietnamese or Indonesian, I would have problems with accepting this claim. I don’t want to start a debate, but what I would like to show here is that it is a rather serious matter that could easily get out of hand.

Well, in Europe we have other matters to worry about but certainly not less significant. The European Union is showing strong signs of fragility, with Italy quickly moving to the brink of bankruptcy and a political change that could move it straight out of the European Union. Poland needs the EU budget but probably wouldn’t shed too many tears if they would have to leave the EU as well. Britain is on the final steps to finalize their exit, Spain is fighting internally against itself and while we didn’t hear much about Greece in recent days, the problems there are still very far away from having been solved. Nothing shows all these problems better than the valuation of the European currency. The Euro is down to a level that we haven’t seen for a very long time. We have conflicts wherever we look.

It is kind of funny and I mean it not in an entertaining way. It’s 2018. It has never been easier to travel to any place in the world. It has never been easier to communicate within seconds across the globe. There was never a time when so many people would be interacting with each other in real time with so many tools at hand for a true 2-way-real-time-exchange. What Skype, Whatsapp, Facebook, Line, LinkedIn, YouTube, Instagram, etc. offer is far beyond what my parents could have ever imagined possible.

And yet, it seems the world is more divided than ever.

We are increasingly connecting the world. Fast trains and planes, new routes and partnerships, new technologies for improved communications, instant translation tools and a stronger emphasis on inter-cultural sensitivity are growing at such a rapid pace that it’s hard to keep up with all the developments. And yet, while everything would point towards a stronger connection among people worldwide, what we see is an increased rejection of these developments and rising conflicts across the globe.

In my professional life, I am a hotel manager and I get to meet people on a daily basis, whether it’s my employees, suppliers, business partners or hotel guests. I change the hotel, city and often country usually every 1-2 years and what I observe, hear and notice wherever I go, is a clear trend towards protectionism. There are complaints about immigrants, heated discussions about regional disputes, a lot of negative sentiment towards religions and yes, we even still have discussions about skin color and eye shapes. People are simply not keeping up with the developments, and they get overwhelmed by the effects. Namely: They get overwhelmed by other people. Other cultures. Other world-views. Other habits.

There are so many questions. Did we ever truly started to think about connecting with others? To become “one” world and “one” people? And another one: Does “social media” deserve its name? Is it truly social? Do tools like Facebook or LinkedIn really connect people? Is the possibility for everyone to raise their opinion to the worldwide public really a benefit to our society or does it only support the spread of false-information, prejudice and subjective opinions that get projected into the masses?

I could probably start a philosophical discourse about all the factors that play a role here without getting to a conclusion, thus to bring it back to the point and theme of this blog, let me say just one thing here.

What happens on the stock market, is nothing else but a mirror of human reactions and their assumptions on the shape of the world, mainly it’s economy. The economy depends on politics. So if you put it together, you always get back to the same point: People evaluate the success of global relations between people and measure it in the form of stock prices. When everybody is happy, peaceful and successful, markets go up and stock prices soar. When people get in trouble, get less peaceful and success is replaced by failure, markets go down. Watching the shape of the world today and where we are heading, it is safe to say that we can expect heavy turbulence on the stock markets across the globe for the next few months to come.

Disclaimer: I am not a professional financial advisor, thus please don’t forget to do your own due diligence before making any investment decisions.

A place is a place, people are people

I had recently an interesting conversation regarding my daughter. She is only 2,5 years old but due to the nature of my job, she already moved 3 times together with our little family and at the age of 3, she will have moved 4 times as I am going to have to move again latest by April next year. Working as a hotel manager requires flexibility and the conversation narrowed down on the topic of traveling and raising children. The common perception is that once you have children, things become more complicated and difficult and that you should settle down somewhere to offer your children a stable and safe surrounding to learn, grow and to develop.

Here is the thing: I don’t agree. At all.

First of all, children are much more flexible and can adapt to new surroundings in a way that most adults can’t even remotely keep up with. I notice it every single time. While my wife always needs two to three months to get around in a new area, my daughter is up and running from day one as soon as we unpack those few bags. She will quickly figure out all the rooms of the new apartment or house, discover the garden and sleeps perfectly fine the next day forward. She also finds new friends quickly and frankly, I believe she rather helps my wife to get accustomed to a new area rather than the other way round.

Secondly, kid’s come without prejudice. If we move to another country, another language area, another cultural surrounding, she just accepts it and quickly figures out how to appreciate it. I would say most adults have much bigger problems with this and in fact, most adults never really overcome the once setup prejudice which remains in their heads since childhood.

If you ask an adult about his or her nationality, what will they say? They got their mind made up and they have mostly a clear answer to your question. There are of course exceptions, such as myself with a double-nationality or specific mindset, but for the majority, there is a clear distinction.

Kid’s don’t have it. They don’t know anything about the concept of nationalities. For kid’s, a place is a place, and people are people. No matter where. No matter who. It is us who destroy this open mind by our teachings of countries, languages, nationalities, and barriers that we consider important to keep up our world order.

I am not saying that it doesn’t make sense, but I am saying that this coin has 2 sides. There is no question that putting things in place and order is important to ensure progress and economic development, but it comes at a high price of differentiating and separating people from each other. This breeds conflict, as we can now see everywhere around the globe. Conflict of economics, conflict of cultures, conflict of religions.

So, for my point of view, someone growing up in different places, experiencing different cultures, languages, mindsets, laws, rituals, and world-views is a huge advantage. A gift, that offers the opportunity to keep an open mind for as long as possible. It surely is not a guarantee and it has its downsides. But that applies to everything, doesn’t it, and at least it offers the chance to see and to learn more along the way.

Why is this important for this blog?

Well, I really just wanted to write about this. But to give a small connection to this blogs main purpose: Reaching financial independence becomes much easier if you free yourself from your prejudice and open up your mind to move out from your comfort zone.

Don’t nail me on the exact statistics but if I remember correctly, the average American household spends 30% of his/her income on housing or rent. The average German household even up to 50% and I believe for Scandinavians it was beyond that. The tax may eat up 25-40% of the total household income and social security deductions that come on top of that.

At the end of the day, people are left with a paycheck that is just enough to keep anything between 0-10% percent of household income for savings and investments. This explains that most EU or US citizens don’t have retirement savings at all and those who do have something stacked up, have by far not enough.

It’s a scary thought, so naturally, people tend to brush thoughts about this away and instead rely on the idea that social security will take care of them once retired at 65. Or 67. Or 69. Depending on where the government will shift this over the next years.

Well, does this really sound like a promising scenario? Working until your health deteriorates and relying on your government to take care of you, even though we all know that social security systems will have to collapse at some point?

When I moved to China as a trainee, my salary was only 500$ a month which was 350EUR at that time (2009). In Germany, I was expecting to get approx. 1,800 EUR a month before tax. And yet, after working 1 year in China, I saved up much more money that I could ever have in Berlin. Because the housing was offered for free, the food was included, there were no taxes to be paid and even the cost for a private insurance was much lower compared to what I would have to pay in Europe for my basic social security.

So what would happen, if you could eliminate or reduce your housing, basic living expenses, and taxes from that total of anything between 50-70 % down to let’s say 10-20% of your total monthly income?

Well, suddenly saving and investing 30-40% of your monthly income doesn’t sound unrealistic at all and retiring with 50 or 55 without dragging any government into this is also becoming a realistic, if not even a desirable target.

If you want to escape the rat race, you should consider getting out of that labyrinth that you got put in.

I know it is not an easy decision, but consider moving to an area that will make these things possible. It may be another state, another country, another continent. Why not? What is it really that binds you to a place? Your neighbors? Family? Friends? Or is it just the comfort to stay at a place that you know with things that are convenient? This is something that really should be thought through and put into consideration.